Blue chips at Harry Ramsden's

Chris Arnot meets the executive who persuaded the City to take a Yorkshire fish and chip shop seriously

THE DIRECTORS of Harry Ramsden's had difficulty persuading hard- headed City analysts to take them seriously when they set out to float their company on the stock market. It was a fish and chip restaurant, for goodness sake. And everybody knew that fish and chips were in decline. The number of outlets was dropping. Market share in the fast food business was also in decline as sandwiches, pizza and pasta expanded.

But John Barnes, the 46-year-old chairman, had done his homework. While he was still heading Kentucky Fried Chicken UK, he had commissioned research which showed that fish and chips were still immensely popular with the British. "The only reason it was down was that it was not organised to compete," he said.

The market was fragmented, the quality was variable and there were no brands. Brands are his business. Years of experience with companies such as Procter and Gamble has taught him how to add psychological values to basic products. If it could create a personality for Fairy Liquid, he could take a Yorkshire institution and spread its Yorkshireness around the globe.

What finally convinced the City that he might be right was the response to a 10-second advertisement on Yorkshire Television. Would-be investors were asked to call a number for a copy of the company prospectus. Mr Barnes, his three co-directors and their wives manned the switchboard, which proceeded to light up like a Christmas tree. The offer was two-and- a-half times oversubscribed.

Six years on and Harry Ramsden's has just recorded another increase in pre-tax profits - up 21 per cent to pounds 1.15m on sales of pounds 4.3m. No wonder the chairman could afford to beam with satisfaction as he surveyed the Friday-lunchtime throng packed into the restaurant at Guiseley, near Leeds, where the great Harry himself once plied his trade. The young Mr Barnes called here in 1970 on an away trip with the Manchester University football team. The chandeliers and the stained glass windows obviously made a deep impression. "It always seemed so much bigger than a fish and chip cafe," he mused while applying a dollop of brown sauce to his haddock and chips. He is a corporate high-flyer who speaks fluent French and worked in Paris for two years. But either his enthusiasm for this piece de resistance of British cuisine is genuine, or he puts on a good show.

He will happily talk about his patriotic quest to take Harry's haddock to the furthest outposts of the English-speaking world. Already there are branches in Dublin, Hong Kong and Melbourne. Other sites are being pursued in Jeddah, Singapore and Perth. At every opening, Harry Ramsden Jnr, the founder's son and a "Fish and Chip Ambassador", is dispatched to spin homely Yorkshire philosophy on local radio stations and bring a lump to the throat of expatriate Brits.

At the last count there were 11 outlets in Britain, including one at Heathrow airport. In 10 years' time, Mr Barnes who has just agreed a marketing deal with Compass, the catering group, expects to have between 40 and 50 branches around the world. By that time, he predicts, a business capitalised at pounds 24m will be worth around pounds 100m. Some of that financial growth will come from endorsing approved food products, such as sauces and pickles, with the Harry Ramsden name and reaping the royalties. Already the company has gone into a joint development on batter. Ross Young's frozen fish and oven chips were considered good enough to warrant an endorsement. "It gets our name into six million homes," said Mr Barnes, between mouthfuls.

But could not it also cause confusion in the tastebuds of consumers who might link Ramsden's with oven chips? "Our research shows that it doesn't stop them coming here to eat," he replied.

Restaurant expansion is based on joint-venture franchising. Suitable franchisees are sought and the company takes between a 20 and 40 per cent stake in their equity. That gives Ramsden's leverage and royalties without huge capital investment. It also gives it the local knowledge of each franchise company about the peculiar sensibilities of their area. Trumpeting the qualities of Yorkshire and England, for instance, does not go down well in Glasgow.

But what about quality control?

Fish, the most important single commodity, is distributed centrally. Ramsden's has a long-standing relationship with its principal supplier, which operates six trawlers. Such a huge contract ensures that the chain can lay down strict criteria. Overseas restaurants receive the same fish using containers.

In each part of the world the company hires a firm of independent "mystery shoppers" to make monthly checks on its outlets. Every restaurant table carries a customer comment card, addressed to head office. Mr Barnes takes a keen interest in these comments. One person who complained was so startled to receive a call from the chairman that he dropped his mobile phone and then, in typically English fashion, apologised for complaining.

In Guiseley, where they are made of sterner stuff, Mr Barnes learnt that customer care has its limits. He approached two burly men to ask if their fish and chips were satisfactory.

"Ay", came the muffled reply.

"Is the service good?"

"Ay", again, followed by awkward silence.

"Anything else we can do for you?"

"Ay, lad. You can booger off."