Business Profile: San Carlo

Business Profile: San Carlo

Family-run Italian restaurant group San Carlo is switching focus away from its northern heartland to expand across the capital.

Every Sunday between 2.30pm and 5pm Carlo Distefano can be found at Speakers’ Corner in London’s Hyde Park getting stuck into the political debate of the day. The founder and chairman of the San Carlo group of Italian restaurants likes a discussion – heated or otherwise – although his son, Marcello, might at times describe them as more of an argument.

Together, the pair run the family restaurant business that bear’s Carlo’s name, Marcello as managing director, and their gentle bumping of heads is a daily occurrence when it comes to operational matters.

When we meet for lunch at Fumo, their newly opened restaurant on London’s St Martin’s Lane, father and son affably interrupt each other, chide the use of mobile phones at the table and express contradictory views throughout our chat. They don’t share the same view on Brexit, on site selection or even, at times, on the type of restaurant they should launch in each new location. They only thing they do agree on, is that Carlo – like the late, great Brian Clough – always ends up being right. Even when he’s wrong.

A case in point has been with Cicchetti, the group’s small-plate concept, which opened on the ground floor of the House of Fraser department store in Manchester in 2010. “My father was nervous about small plates and said we had to have mains size dishes as well, recalls Marcello, grinning at his father across the table. “So we launched with a menu with two sizes of dishes and it was chaos. People were getting the wrong size dishes and were confused about whether the food being served was a starter or a main. So we eventually ended up going back to the small plate idea, and it worked. I like to remind him of that.”

His father had the last laugh, however, with the launch of the second Cicchetti in London. The pair were at loggerheads over the location, with Marcello favouring the former Zilli Fish site in Soho while Carlo wanted a spot on Piccadilly. This time Carlo got his way, and the resulting restaurant proved an overnight hit. “He likes to point out the mistakes I’ve made over the years,” adds Marcello, with another
smile. “He always pulls rank in the end.”

A varied portfolio

Disagreements and minor squabbles are a normal part of family life, but San Carlo has used the different viewpoints of its protagonists to its advantage since the company was founded in 1992 when Carlo, a former barber, opened his first restaurant in Temple Street, Birmingham.

The patriarch, who turns 73 next month, is almost twice the age of his son – who this month celebrates his 38th birthday – and while they don’t always see eye to eye, the generation gap and the different styles that come with it have led to a company popular with a wide demographic.

As an old school ‘entrepreneur’, Carlo runs the business by phone, checking up on his restaurants with a tenacity that belies his 70 odd years. He is also the optimist of the two, preferring to follow his instinct rather than any SWAT analysis. Marcello, by contrast, describes himself as an ‘email person’ and more of a logician. “When we do a new launch I have a checklist in my mind that needs to be ticked off. Often we do something that sounds like it’s not going to work, but my father will just go with his gut feeling. We have very different approaches.”

The group operates 17 UK restaurants in cities such as Bristol, Leicester and Manchester (it also has sites in Qatar and Bangkok) across a few different brands, each characterised by a high level of food and fit out (the company routinely spends £1.5m per site) but tries to give each restaurant its own personality.

In Manchester it operates a flagship San Carlo restaurant as well as a San Carlo Bottega on the second floor of Selfridges and a San Carlo Fiorentina in the Marriott Hotel. In addition, it runs a Fumo and a
Cicchetti in the city as well as a Gran Cafe, also in Selfridges.

While each brand bears the San Carlo signature to show it is part of the family business – “having the name makes it easier for people to relate to it. It is important,” says Carlo – each has subtle differences that allow the company to play to slightly different areas of the market, albeit still at the premium end.

“We can’t open five things exactly the same in Manchester – the city can’t sustain that,” says Marcello. “When you are at the premium end of the market and you start to create a chain it devalues the brand. We made the conscious decision not to open loads of San Carlos but instead do things slightly differently.”

Like Cicchetti, San Carlo Bottega serves small plates, but the group decided a new brand would be more suited to the department store clientele. Bottega, therefore, has a bigger drinks focus and features a cocktail and champagne bar.

The company then took on the cafe site on the ground floor because it didn’t want to compete with another operator in the same building, this time creating a more coffee-and-cake-led offer.

“We make all our own patisserie and ice cream anyway, so it was an easy thing to do,” says Marcello. “It has given us the confidence to do something else like that in the future.”

Cicchetti, meanwhile, allows the group to open in smaller locations. “We probably wouldn’t have taken a 4,000-5,000sq ft site in London with a rent of £500,000, but it allowed us to take a cheaper, smaller, 100-cover site,” says Marcello of the Piccadilly restaurant.

The Fumo brand, which combines a cocktail bar, restaurant and late lounge,also came about through wanting to avoid both repetition and competition. The first Fumo opened in Birmingham when a site next to the original San Carlo came on to the market and the family didn’t want anyone else on its territory.

“The original idea was to extend into it, but that wouldn’t have made sense so we came up with another concept,” recalls Marcello. “Cicchetti wouldn’t have worked because there are no daily shoppers and
not enough footfall, but there is a huge amount of office space.” Thus Fumo was born, dedicating half of the floor space to a bar to achieve a 50:50 drinks/food split.

And then there’s Flying Pizza in Leeds, a brand that on the face of it sits at odds with the others in the portfolio. Rather than being a more quick-serve pizza restaurant, as the name suggest, is it in fact a standard San Carlo – there is another San Carlo in the city – but under a different guise. The restaurant had long been known as Flying Pizza and the family decided that retaining the name would be a sensible move.

Even brands in the same stable are not carbon copies of each other. The new London Fumo has a very different feel to the ones in Manchester, Liverpool and Birmingham. “You’ve got to be creative depending on where the restaurant sits in the market,” says Marcello. “If you’re a fast-casual operator you can create 30 or 40 restaurants that are exactly the same, but at our level it has got to fit with the city. I like it when people say they prefer the Liverpool San Carlo to the Manchester one because it means they have got some personal attachment with the restaurant. Tim Bacon did it very successfully at Living Ventures.”

There is more consistency with the menus, which don’t vary greatly site to site. In 2012 chef Aldo Zilli was appointed group exec chef, or ‘chef consilere’ to coincide with the opening of Cicchetti Piccadilly, and he oversees the menus across the group.

A London focus

The newly opened Fumo on St Martin’s Lane is significant in that it marks a continued push into the capital from the family. As well as two Cicchetti restaurants, the second being located in Covent Garden, San Carlo owns restaurant Signor Sassi in Knightsbridge, whose purchase marked the company’s arrival in London.

Again, rather than re-branding the Italian restaurant that Carlo had long frequented he decided to retain the Signor Sassi name. There are now plans to build the brand with the opening of further restaurants under the name in prime London locations.

Moreover, London will be the main focal point for growth, with the Fumo and Cicchetti brands ripe for rollout. “We are not strategically opening any more restaurants in the provinces,” says Marcello.

“We might do the odd thing organically, but the focus now is London. We say to operators in the north ‘why not open in London, it’s a great market?’ and they say they are not ready for that. Yes the rents are astronomically high but there’s seven day’s trade in London. You can walk around Manchester city centre on a Monday night and it’s dead.

“Lots of London operators are saying it’s too expensive and are moving out, we are doing the opposite and saying it is expensive but there’s a huge amount of people. I’d rather pay more rent and have a full restaurant every day.”

“We were frightened by the rent but we bought Signor Sassi and got that confidence,” adds Carlo, who says he tripled the takings at the Knightsbridge restaurant on taking it over. “People said ‘Carlo, Harrods has got 24 restaurants, there’s too much competition and it’s too hard’, but I think it was a piece of cake. In London you can be much more creative and express yourself properly. In the provinces we have big ideas but we often can’t do them.”

The company is also shifting its attention to London to avoid opening more places in what it believes is a saturated market in Manchester and beyond. “In the past few years lots of private equity money has one into restaurant groups and we have seen a huge amount of groups expanding quite quickly,” says Marcello. “In the past five years the number of restaurants in Manchester has doubled and the provincial markets are becoming over saturated in terms of number of restaurants. It will be interesting to see what happens over the next five years. We will see some groups suffer.”

“Here [Fumo London], if 10 restaurants opened around me I’d be happy as it will bring more people to the area. In the provinces if someone opens near you they pinch your staff. You don’t really compete with anyone in London because the place is so vast. Manchester is a more competitive market.”

What of the rash of groups opening up in the company’s northern heartland? Marcello is sceptical that all will succeed. “Once you have private equity money it’s like playing monopoly. We see some of the sites
they are picking and think ‘who’s advised you in the city on that?’. Some haven’t done their research properly and will get their fingers burnt.”

The future shape of the business

As to the pace of expansion in London the pair aren’t willing to put forward any estimates. “We’re still a family business so we won’t say we will open 10 sites in the next three years. It’s our own money and we’re careful with it. If a site feels right we’ll move on it and we’re happy to keep going like that for the time being.”

This might change in the future Marcello admits, depending on what the next few years bring: “We might separate Cicchetti from the business and seek funding to grow it faster.”

Next year will also likely see the company make its first permanent move away from Italian with the development of the Feast pop-up restaurant it launched in November opposite Manchester’s San Carlo. The 75-cover winter project is a collaboration with former The Mark Addy chef Robert Owen Brown serving ‘sophisticated and seasonal comfort food’. Dishes are British and include menu items such as plum and rum tobacco smoked Cheshire venison carpaccio; scallops with celeriac mash and Bury black pudding; claret braised Forest of Dean wild boar, Chorlton chorizo and horseradish dumplings; and baked alaska with Christmas pudding ice cream.

Unlike the other restaurants in the group, it’s not branded San Carlo, “but essentially everybody knows it’s us,” says Marcello.

Once the pop-up is over, there are plans to create a permanent restaurant in the space, which will retain the British angle. “We’ll do something different that doesn’t cannibalise the other restaurants.”

Another factor that will decide in which direction the company moves in the coming years is Carlo himself. While Marcello says he’d like to push the brand into more far flung UK locations his father, who still visits every restaurant each week, wants the focus to be on city centres within easy reach. And it is Carlo who casts the deciding vote.

“If he retired tomorrow we would expand into areas he would never go to,” says Marcello, with Edinburgh and Newcastle locations under consideration.

“Until then we will open where he can get to. We are restricted by that. Things might be a little more relaxed, too,” he adds with a glint in his eye. And will Carlo ever retire? “No,” he says, mirroring the
expression. “I’ll retire when I go.” 

There’s a feeling that some of the restaurant menus might become more streamlined should Marcello have total control. The flagship Manchester site has a menu “as big as the bible” according to Carlo, purely because he can’t bring himself to take any dishes off the menu and is continually adding new ones. Not only that, he expects new dishes to come on almost immediately, with his phone calls to his restaurants of a morning demanding a particular new dish be put on for lunch that day the stuff of legend.

And yet you can’t argue with his approach. Manchester routinely takes £170,000 a week and on a match day it can do £50,000.

When Carlo eventually does retire, he’ll leave behind a business still very much family led. His daughter Sasha oversees marketing for the company and his younger son Alessandro runs Fumo in Manchester. Although one suspects this won’t mark the end of the gentle family disagreements.

“When I get to my father’s age I’ll be just the same as him,” says Marcello. Like father, like son, after all.

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