The Independent On Sunday (UK): George Charters: You only go to spend a penny. But he's trying to get you to spend a bit more: “The only thing that isn't at high- street prices now is the petrol, which can be as much as 8p a litre more than you'd pay at your local forecourt. Charters says this is not of his doing: he has a deal with BP and Shell, which set the charges.” (ShellNews.net) 5 June 05
The shareholders are relieved, and so are the customers. Welcome Break's boss tells Jason Nissé about the financial revival off a motorway near you
If you go to Leicester Forest East service station on the M1 this summer, you should expect excellent service. Behind the tills will be Greg Charters, a 19-year-old student. Not only is Greg the son of George Charters, the chief executive of Welcome Break, which owns Leicester Forest East, but he is the company's star employee.
Last year, in an effort to improve Welcome Break's image, Charters senior invited a team of mystery shoppers to assess how good each of its 24 service stations were. The retail part of Leicester Forest East received terrible marks in the spring survey. But later in the year, a reassessment gave it top billing. Asked whether there was an outstanding staff member, the mystery shoppers named a certain Greg Charters.
"I'm glad it's my boy helping them go from bottom to top rather than top to bottom," says the Welcome Break boss. "Especially given my background."
He arrived at the company three years ago after a career taking in Mars - where he worked with Royal Mail's chairman, Allan Leighton - Boots and Safeway. For the previous three years he had been at venture capitalists Apax Partners, where he led the buyout of the German motorway service group Tank & Rast.
When Investcorp, the Bahrain-based private finance group which owns Welcome Break, brought him into the company, it had crippling debts and sales were in the doldrums. Now it is profitable, the debts are under control, and Investcorp is talking about a possible sale or float in the next couple of years.
Welcome Break was originally part of Forte, the hotels group, which was taken over by Granada nine years ago. Granada already owned a chain of motorway service stations - now rebranded as Moto - so it had to sell Welcome Break, which it did for some £470m. Investcorp spent £160m tarting up the sites, with open-plan dining areas, children's playgrounds and even a waterfall at the Oxford services on the M40.
However, the investment left the group struggling with £370m of debt, and a core of angry bondholders threatening to push it into receivership. Most of last summer, when Charters junior was selling sandwiches and Mars bars, his father was selling a refinancing deal and ultimately selling the freeholds of the service stations to Robert Tchenguiz's Rotch property group for £270m. With the debts down to £150m, and profits of £34m before tax in 2004, he was even able to refinance the borrowings again this year.
"Our shareholders have been very supportive, but I'm sure that when they bought the company in 1997, they didn't think they'd still be owning it in 2005," Charters explains in his soft Scottish tones. "When I joined three years ago, they were getting very frustrated."
To help deal with that frustration, Charters had to get the service stations performing as well as they could. To do this, he had to find out exactly who his customers were and what they wanted.
We all moan about the poor food and high prices at motorway service stations, but when Charters put market researchers on the case, he discovered that what people really valued was cleanliness and a good environment. After that, quality of service came second, with the standard of food third and price a distant forth. All in all, 89 per cent of customers said they were either quite or very satisfied with Welcome Break, and an astonishing 55 per cent claimed to be regular visitors, going to the same service station at least once a fortnight.
"The message we got was to try to worry less about price and more about service," says Charters. Not that he is whacking up the prices until the customers' wallets bleed. He says the key now is to give visitors a "high-street experience" - so they see familiar brands (KFC and Burger King in Welcome Break's case, Marks & Spencer for Moto and Coffee Republic at RoadChef), and are charged the same as they would be on the high street.
This has led to a strange branding war breaking out. Under the arcane rules that govern service station licences, the signs on the motorways can show only the name of the company operating the site, not the plethora of brands on offer (as in the US). To get round this, Moto, which is owned by Compass Group these days, has created a new holding company called "Moto Marks & Spencer Simply Food", which is now on the motorway boards. RoadChef followed suit last month with "RoadChef Coffee Republic", and Welcome Break is being renamed "Welcome Break KFC", tempting motorists with a finger-lickin' offer.
But why KFC, when Welcome Break has Burger King franchises? "We are unique with KFC - Moto also has Burger King," says Charters.
The only thing that isn't at high- street prices now is the petrol, which can be as much as 8p a litre more than you'd pay at your local forecourt. Charters says this is not of his doing: he has a deal with BP and Shell, which set the charges. But what he is busy doing is trying to sell as much extra stuff as possible to the people who come just for petrol - 84 per cent of forecourt customers don't visit the main part of the station.
Ultimately, it is hard to grow a business that people mainly go to because - as Charters quaintly puts it - "they need to satisfy a bodily function". But Welcome Break is trying all sorts of innovations, such as setting up deals with football supporters' clubs, so that notice is given of when they will be stopping at a service station. This allows the operator to put on extra staff to make and serve food. For example, Arsenal fans always stop at Keele on the M6 when the team is playing in the North-west.
Another innovation is gaming. The small clutch of slot machines that Welcome Break has in its locations are massive money-spinners. Charters is watching changes in the gaming laws closely because he wants to set up what are called Adult Gaming Centres, otherwise known as fixed-odds machines.
Charters realises, though, that service stations are no longer a licence to print money. With 24-hour opening, large car parks and big security issues, operating margins are only around 3 per cent.
And 35 per cent of us visit a service station and only spend a penny. Which isn't going to make George Charters, or his son, anything at all.
BIOGRAPHY
Age: 52.
Education: Heriot-Watt University - degree in chemical engineering.
Career (1975-78): Shell - engineer.
1978-1990: Mars - various marketing and engineering roles.
1990-95: Boots - director of merchandise and marketing.
1995-98: Safeway - managing director.
1998-2002: Apax Partners - head of retail and consumer products.
2002 to now: Welcome Break - chief executive.
http://news.independent.co.uk/people/profiles/story.jsp?story=644139
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