Earning a crust
1 July 2002
Update on Orozco v Plackis: was franchisor’s principal the employer of franchisor’s employee? Fifth Circuit reverses — three takeaways
11 August 2014
7 April 2014
18 February 2014
25 June 2014
5 May 2014
Patrick Hartrey, company secretary at Pizza Express, is looking rather flustered when he arrives at the Aldwych branch. Day trips to London from the head office in Uxbridge are apparently a whirlwind tour of as many branches as possible. These days, however, visiting all the branches in one day would be virtually impossible. After floating on the stock market in 1993, the company now has around 30 restaurants in central London alone, and approximately 45 per cent of the 280 UK branches are within the M25.
Pizza Express dates back to the early 1960s. The chain's founder, Peter Boizot, frustrated by the lack of good pizza in England, imported an Italian pizza oven (and a man to work it) and opened a restaurant in Wardour Street. By 1967 the second branch had opened in Bloomsbury and more were to follow as the popularity of the pizzas took off.
"It used to be an entirely franchised operation," says Hartrey. "Then, in 1993, Pizza Express Ltd, which ran 10 restaurants, got floated and used the money to expand very aggressively; and it got to a point a couple of years ago where it needed a full-time company secretary." Hence the arrival of Hartrey.
He has been in the company secretary business since the mid-1980s, working at a variety of companies. Prior to Pizza Express he held the post at Caledonian Investments.
Hartrey estimates that 30-40 per cent of his time is spent on legal work. "The main area of work - unless we're in the middle of an acquisition - on a day-to-day basis is mainly intellectual property litigation," he says. "We take our brand and image extremely seriously. We're not about to let people use our name. And a lot of people think, 'Oh, that's a good name - we'd like to use that'. So we stamp on that firmly."
He provides an example. "There's one that sticks in my mind," he says. "Some chap was importing portable electric pizza ovens from a small company in Italy, and they [the ovens] were called the Pizza Express. Our chairman had been on the net and seen them and said to me, 'Can we sue these guys?' And I said, 'Yes, Dave, we can'." And did they sue? "Oh yes," he laughs. "They're called something else now."
I am a little surprised when he later proclaims: "It [Pizza Express] is a useless name." He then explains: "It doesn't describe the sort of restaurant we are. If you haven't been in a PE restaurant and you don't know the brand, it would summon up images of 17-year-olds on mopeds, which is rather unfortunate."
But it is not just trademark cases that are taking up a lot of Hartrey's time. The company is increasingly involved in a number of other litigation cases. "Unfortunately, Britain's becoming a more flippantly litigious place. We do get an awful lot of claims that you have to query their validity."
Such claims come from both customers and staff. "A lot of people think, 'Oh, I've fallen down the stairs at Pizza Express; they're a big company, they'll have deep pockets'," Hartrey continues. "It's regrettable, but there's a lot of that about. Obviously, there's a fine line - if anyone has a genuine case you'll compensate accordingly. But there are rather too many chancers around for my liking."
For litigation work, Hartrey enlists the help of Philip Sewell, a litigation partner in the London office of McClure Naismith. "He's been a litigator for a long time; he's a good litigator and he hasn't lost a case for me yet. They've been very successful for us," he says.
As well as a good track record, McClures' size is also a draw. "Using firms like that, you get much better value for money," explains Hartrey. "We don't have a huge legal spend, so therefore it's not going to be appropriate for us to instruct Linklaters or Freshfields [Bruckhaus Deringer] - they're just not going to be interested, frankly. If you're Deutsche Bank, then yes, Freshfields are going to want your money; but they're really not going to be that interested in the sort of money that we're spending. So you're just not going to get very good service, unfortunately."
Aside from litigation, Hartrey says that in the last 12-18 months it has been pretty much business as usual. "We're not driven by acquisition or merger, we're broadly in the business of organic development and growth. Opening and running restaurants is what we do and we do it very well. We don't need to take anyone else over." That said, the company has made some noticeable acquisitions in the last few years. One was the Café Pasta chain. Then, earlier this year, it paid £1.95m for Kettners in Soho, which counts Oscar Wilde and Edward VII among its former customers.
There has also been the rapid expansion of the business overseas. Pizza Express can now be eaten in 17 different countries. Most of the overseas businesses are franchised, but the company has made direct investments in Spain, France, Japan and India.
Even in countries where the company has an equity interest, the individual managers in those jurisdictions find their own legal counsel. "Obviously, we're looking to have greater watch over jurisdictions where we have equity interests," says Hartrey. "But Pizza Express is very much an organisation that encourages people to get on with it. We don't want to stifle, for example, the Spanish managing director by constantly looking over his shoulder. If he's doing his job properly, then that's good enough for us. It's his responsibility to build a relationship with a firm."
The rapid and aggressive expansion of Pizza Express looks set to continue. The company believes the UK could support around another 200 traditional restaurants. But Pizza Express has also been branching out in other directions. For the past year, the company has been selling chilled pizzas in Sainsbury's. "They're just flying off the shelves," says Hartrey. "They're just in Sainsbury's at the moment, but we're looking to expand that because it's been very successful."
Almost too successful, perhaps. Chief executive David Page recently attributed the company's drop in fourth quarter profits (announced last week) partly to the success of the company's supermarket pizzas. The sales in Sainsbury's averaged 40,000 a week last year; now they are hitting 133,000 a week. But 40 per cent of those purchases are made by restaurant clientele.
The company has been aiming to broaden the client base by moving away from traditional high street restaurants and into shopping centres, retail outlets, multiplexes and airports. Plus, in the last six months, it has opened two takeaway outlets at Paddington and Victoria stations.
"We see that as something within the next five years which will grow hugely," Hartrey says. "I think it's fair to say that, at the moment, our core restaurant audience is a relatively small group of people who come back regularly. But this [the takeaway business] is taking our brand name to people who wouldn't normally come across it. Our aim now is to widen our clientele." Hopefully, he is not talking about their waistlines.
|Legal capability||None - all work outsourced|
|Company secretary||Patrick Hartrey|
|Reporting to||Finance director Paul Cambell|
|Main law firms||McClure Naismith (litigation); Lewis Silkin (employment and property); Blake Lapthorn, Maclay Murray & Spens, Warner Cranston and Wragge & Co (property); Berwin Leighton Paisner and Pinsent Curtis Biddle (corporate)|