Faucet Inn's journey from pubs to all-day dining

Founder and managing director Steve Cox talks to James Wallin about the opportunities in casual dining, how he implemented a living wage structure and the challenges posed by legislation governing the ability to develop pubs

The clichés for a good salesman are wellworn – they can sell ice to the Eskimos, sand to the Arabs, and so on – but Faucet Inn founder Steve Cox could be the first Brit to flog meatballs to the Scandinavians.

When Cox opened the first site for his Scandinavian-inspired, all-day dining concept KuPP in Paddington, west London, earlier this year he made no secret of the fact he saw this as a format that could be rolled out. But while there are further UK sites planned – perhaps even before the end of this year – the second KuPP is likely to be in the Norwegian capital of Oslo.

Advanced negotiations are also under way on a site in Finland’s capital Helsinki for the second quarter of next year.

KuPP is rolling out internationally and domestically alongside another all-day dining format – Neighbourhood – with work on its second site, in Southampton, due to start imminently.

But Cox insists the company’s 18-strong pub estate is still a core part of its offer. He said: “For us to grow through pub acquisitions in London would have taken a very long time. We don’t have the deep pockets family brewers have and can’t afford to take the longer-term view. Looking at new builds and engendering our own goodwill on these properties seemed like a sensible business strategy going forward.

“We are looking at offloading some of the smaller pub sites, but we are investing in our core sites and would look at further pub acquisitions if the deal was right.

“There is a huge amount of innovation in casual dining and pubs at the moment, and I see great potential for us in both areas.”

But the focus is on KuPP and Neighbourhood with an aim to reach 10 for the former and five or six for the latter before 2017.

On taking KuPP to Scandinavia, Cox said: “The whole region is very compelling.

Spend per head on F&B is very strong – about three times what it is in the UK and there is a big tourist market. The market is generally either very high end or grab-and go.

Casual dining seems to have passed them by and we had to explain how it actually works in the UK. There is huge potential for that sector in Scandinavia because no one is really tapping into it. “There is a certain amount of trepidation but we have always been clear that we are Scandinavian-inspired and we are bringing our own interpretation to it. We are not trying to compare our meatballs to Uncle Olaf ’s family recipe – we use British beer in the recipe to add our twist.”

Cox said the inaugural KuPP in Merchant Square has attracted a strong following from the Scandinavian community, which helped make final tweaks to the offer.

The takeout Fika coffee element of the business has been the slowest to take off, but Cox said consumers were now finding a taste for the more subtle, filter-based coffee offer – typical of Scandinavia.

He said lunchtime and afternoon trade had been the site’s strongest area, but sales were also growing in other day parts.

He said Neighbourhood, which focuses on fish and meats cooked on a Robata Flame grill and rotisserie with a craft beer and cocktail drinks offer, had seen a slower start, with tenants still moving into its home in Stratford City, but is showing good growth.

Faucet Inn was one of the sector’s trailblazers in offering staff the living wage, but the process was not straightforward.

He said: “Paying someone a fair wage for a fair day’s work is absolutely the right, moral thing to do. We moved away from the London living wage and developed our own approach because we found that having to make sure all our supply chain were London living wage employers as well made it unworkable. We now title it our Well Serve Wage – it works on the same principles as the London living wage.

“There were lessons along the way. One thing we probably didn’t take into account was the upward cost of it. As you put up the wages of your front-line staff, it has a knock-on effect on the higher salaried staff. While I absolutely agree that it’s the right thing to do, you still have to make a return, otherwise it’s just an empty gesture. “Recruitment is still a major challenge for the sector, including Faucet Inn.

Cox said: “At KuPP, we recruited effectively from scratch – none of the people working here had any experience in the F&B sector so we had to go right from the basics. While that seemed like a mountain to climb, ultimately it has worked in our favour because they were essentially a blank canvas and we were able to train them in the way we wanted them to be trained.”

Restrictions on development of property also represents a barrier to the company.

Cox said: “Assets of community value rulings have caused a lot of challenges. It’s such new legislation that everyone has been on a learning curve about it. One waits to see whether that has any impact on value of these freeholds, which would be slightly self-defeating. In principal, we think the legislation is fine but it’s the application that leaves a lot to be desired.

“There is a preconception that any development is bad for the pub, but we have had situations where we have bought freeholds and in order to release equity to invest in the pub we needed to develop the upper floors. We have now had our hands tied on that, which means even more equity is needed from day one.”