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Raising the steaks

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Entrepreneurial restaurateur Kingsley Smith shares the secrets behind his phenomenal business growth.

It was only recently when Kingsley Smith stumbled on a newspaper article from 1994 – when he started his steak and crab houses – that he stopped to realise he was finally close to fulfilling his ambitions.

“I said I was planning on opening an Australian-themed restaurant chain that I would develop in Australia and then expand into Asia,” he says. “It may be 15 years later, but we now have a business model that will allow us to do that. Back then, I think it was a dream without the realistic tools to do it and now we actually have the tools to do it.”

Smith’s foray into restaurants began during his schooling at Scott’s Bathurst in NSW, as a means to keep up with his Sydney mates during the holidays. After a brief time with an architect firm where Smith realised he couldn’t sit still long enough to become a draftsperson, he continued to work in restaurants and hotels in Queensland and New South Wales until a pivotal opportunity arose with the Lone Star Steakhouse, a large American restaurant chain that was expanding in Australia.

It was here Smith met mentor and man synonymous with franchise brands KFC, Pizza Hut and Sizzler, Bob Lapointe. “Bob was looking for restaurant managers to set-up the first store and help ‘Australianise’ the concept a little bit,” says Smith. “The first store was in Parramatta and was hugely successful and Bob become somewhat of a mentor.”

It was an excellent training ground for Smith and facilitated his first visit to New York where he experienced steakhouses that had been around for up to a century. “It got me thinking, ‘Why don’t we have a lot of steakhouses in Australia?’ We have the best red meat and the best red wine in the world but we don’t have a lot of steakhouses.”

Inspired, Smith opened the first Kingsley’s Steakhouse in King Street at the age of 24.

“I found a landlord that was willing to put in a contribution for the fit out as I didn’t have a lot of cash, probably $10,000 in the bank,” he says. “And off we went.”

Branching out

At the time of writing, his brainchild claims to be Australia’s only publicly owned restaurant group and recently launched a $6.3m initial public offering under the name of the Pacific Restaurant Group. The group consists of Kingsley’s Steak and Crabhouse restaurants nationally, and a new ChopHouse restaurant brand aimed at a 20 to 40 year old demographic with very quick service and a massive chopped salad menu.

It reads like a textbook case of phenomenal growth, but Smith is candid about the challenges that come with growing quickly.

“I opened a Kingsley’s in North Sydney and it didn’t quite work. It was bad timing in the market,” he says.

“Woolloomooloo opened in September 2000, just before the Olympics, and it’s being growing at over 10 per cent in sales every year since.”

Smith is predictably tight-lipped when it comes to discussing what has been known among diners as the ‘other Kingsley’s’.

“In 2000, with North Sydney struggling, I sold King Street and the people that bought it wanted to open more restaurants. They then went and opened up Bridge Street and King Street Wharf and we were in loggerheads over a court case for nearly three years – we’ve now settled that.

“That was a very tough and costly period and I suppose the lesson from that is protect your brand and that no matter what business name you register, trademark is more powerful than anything else,” he says. “Pursue your trademarks and think nationally even if it’s a long way off because there are people who will jump on top of a good idea and copy it.”

Behind the scenes

Looking back on the growth, Kingsley feels his biggest mistake was embarking on restaurants without the back of house infrastructure to sustain it.

“When I tried to expand when I was 28, I underestimated the amount of investment needed to put into back of house,” he says. “This time around, I invested significantly into a back of house operations from accounting to human resources and particularly information technology and customer relationship management.”

The group now runs off a centralised reservation management (CRM) system and has over 50,000 people in their database. “It’s quite a serious database and it means we can keep in contact with our customers at a unique level. The CRM attaches to the bill to each client so we can see what type of a person they are, whether they’re a Grange or a Penfolds Bin 28 drinker, a strip loin or a wagyu eater,” he says.

Seeking professional advice and being prepared to pay a premium for the right advice was also crucial in gearing up for expansion.

“Working with skilled people was my turning point for growing the business. I recruited a very experienced operations manager, a business development manager and brought a certified practising accountant on board,” he says. “Once I had that team, I knew that we were ready for growth because I was surrounded by people who knew a lot more than I did and we were ready to deal with the larger corporations and be one step ahead.”

Published on: Sunday, June 28, 2009

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