The news that Bill Toner is out of retirement has caused great interest. One of the most accomplished leaders of the past 15 years, Bill has proven that he is able to deliver real transformation in business, and as chief executive of Host Contract Management many expect the business to flourish. So has he changed during his time away? And will two such natural leaders in Bill and Jerry Brand (founder of Host) be able to work together effectively?
Bill Toner’s story is peppered with achievements. Beginning his career in the hospitality industry at the age of 14 as a kitchen porter in a small hotel in Bathgate, West Lothian, Bill wanted to be a chef and worked hard to fulfil this early ambition, spending time in France and South Africa learning the trade. Returning to Scotland at the age of 23, he joined Gardner Merchant and spent the next 20 years with the business that would ultimately become Sodexo, rapidly rising up the ranks and becoming Managing Director of the UK in 1995, aged just 36. By the age of 41 Bill was appointed CEO of ARAMARK and transformed the business into the UK’s third-largest contract caterer with over 1,000 contracts and an annual turnover of £400million.
It is with the knowledge of this remarkable story that I sit down to meet Bill, and what is immediately noticeable is the modesty of his demeanour. Bill is a physically striking character with a lot of natural charisma, yet he almost defuses this with his unassuming nature. We meet the night after this year’s Catey Awards and he has been struck by the force of welcome received, both by people who have worked for him in the past and the many people who are just happy to see him back. Bill is no shrinking violet, but it is very clear that he possesses a great sense of humility in how he goes about things. Some wonder if he has mellowed during his time away?
“My honest answer is that I have had the privilege of time to reflect on what was great about what we did and how we went about it, rather than spinning too many plates and being sucked into what our corporate leaders wanted. I’ve come back fresh, prepared, excited and with a clear understanding that the people we employ, how we manage and develop them, are, and always will be, our biggest asset. I don’t know if senior leaders today have the luxury to sit back and think about what is transpiring in the market, globally, about their people and how they can best manage and facilitate these changes.
“People have said that I am always tough but always fair. If that is my reputation historically then I’m happy with that. I never took prisoners but treated people how I wanted to be treated and worked hard at creating an environment where people could be developed. Have I mellowed? Mellowed is probably the right word, but that’s because I’ve had time to relax and think things through.”
For five years, Bill made a conscious decision to take time out to be with his family, basing himself in his native Scotland, and so the news that he was to be appointed as chief executive of Host in May took the industry by surprise. It emerges that Host founder Jerry Brand undertook what Bill describes as a clever approach to reawaken his business instincts and ambition.
“I had absolutely no intentions of coming back. We were enjoying life and then I bumped into Jerry in Portugal. We had had some discussions in the past but these were fairly quickly bought to a conclusion. This time it was a different set of circumstances. He cleverly asked me to mentor Andrew Scott, Host’s sales director, who actually used to work for me. I thought he would run to the hills!
“I had mentored a couple of small companies for the Duke of Edinburgh Awards, offering advice and hand-holding; I find the dialogue hugely interesting. So I decided to do it. We met and talked through his challenges, and I had the time to listen to him. That’s quality time, whereas normally in a senior role you have a million other things going on and at some point you piece it together. That is how it started.”
An agreement to work two days a month as a consultant mentoring Andrew took a step forward when Jerry then asked Bill to facilitate the senior management team’s annual strategy planning session.
“If you are selling or representing a business it is essential to understand the product and the differentials you have versus your competitors. I wanted to feel, see and touch the management team to make sure it was robust and tangible and could deliver on its promises.”
At this point Jerry suggested Bill become chairman but this was declined so that he could spend a few months in the business to gain more clarity around his thoughts. Bill eventually did become chairman, but this commitment quickly increased as he developed his mentoring role with Andrew to not only guide him, but facilitate what the sales team were doing in order to accelerate the growth strategy. In his view, Host had an excellent infrastructure but was perhaps pointing in too many directions and the challenge was to focus on where the business wanted to get to. As he got more and more involved, Jerry suggested that Bill take over and run the company.
“Initially I said no but later, when a few more projects were on board, Jerry suggested it again and by that stage I had more than dipped my toe in. The rest is history.”
Cynics wonder about the ongoing partnership with Jerry and Bill. Jerry is an entrepreneur who set up Host in 2004 and there is some question whether he will be able to take enough of a step back from the business to allow the more corporate entrepreneur in Bill to have true control. Will the pair be able to last the distance?
“People are interested to see what’s happening. People say that we are two big egos but I don’t know if ego even comes into it. I enjoy working with Jerry because he has an extraordinary work ethic and cares about the business and what we are capable of. That approach marries with mine.”
Many speak about investment in people as an engine of organisational success and it often emerges almost consequentially in discussion and debate, usually after economic and other challenges. Bill wants to make the issue centre stage with Host and it is a recurring element of our discussion, harking back to his experiences of working with Forte and Gardner Merchant. Clearly his own enjoyment of mentoring Andrew has been the catalyst for reawakening this vision onto a new platform through Host.
“All the wonderful things in the business in the good old days of Forte and Gardner Merchant revolved around people – this was the thrust of their success. It was about people delivering what they said they would, and the infrastructure was designed to do that; it was a fabulous environment.
“Sadly, this dynamic changed. Sodexo became focused on servicing debt and cashflow and the emphasis on infrastructure disappeared. When I left Sodexo/Gardner Merchant to join ARAMARK, it was a privately owned company, and all about people and delivering. Once that company became quoted, the dynamic changed to servicing debt and cashflow. Naturally you are part of that so you deal with the challenges.
“Host for me was the first business I had come across in long time where these dynamics were not present; it had no debt, was cash generative and made a profit. So the whole emphasis is on how we deliver on promises, incentivisation, growth and keeping clients happy. That just felt good. This is what it’s all about.”
More specifically, Bill explains that he is driven to move beyond managing churn amongst his management team.
“Managing development means you are growing your own talent. Already within Host we have earmarked people for other jobs; there is a lot of talent there and it’s our job as a management team to grow that. This was a big part of what we did at Gardner Merchant. Executives were rewarded for retaining people and the development of talent. It was in complete contrast to cutting the bottom 10 percent and replacing them by buying in new talent: in my eyes this was a waste of energy and time. Often the people who we think are failing are not, and if you make it clear what they need to do then they will flourish, and in doing so they bring skills with them.
“The industry has lost something – I feel passionately that this is the case. We have to all step back and recognise that there is a responsibility not just to our shareholders, but through collaboration with the education sector and industry bodies, to ensure that we are developing talent not only for tomorrow but in five years time and beyond. Over the last five years we haven’t even read about this issue; it has all become about who is winning what contracts, the recession and problems.”
Thus Bill’s vision for Host is a long-term one, recognising the hugely competitive and aggressive environment within which food service operators are now seeking to grow their companies. His ultimate aspiration is to build a £100 million business with the appropriate infrastructure to service and deliver on promises to clients, but also to have people grow through the company to meet and exceed their own expectations. However, he has no doubt that the game to be played has to be astutely managed.
“The market is quite simply very aggressive on new business margins and I would underline that point. The big boys are clearly determined to retain their existing portfolio of contracts and sweat that asset. Those who are cash rich are not getting much of a return, and are looking to buy businesses, but this is in the context of diluted multiples so you are picking up volume at a reasonable price.
“In my view, other operators are continuing to reduce costs and infrastructure to service their client base, whereas I still believe that food service will be an integral and important part of any client’s cost. The great thing about our business is that we need to eat and drink. There are still innovations that can be made to ensure that this is a stimulating and rewarding experience. If we don’t get the component parts right, people then tend to say they are not happy and walk with their feet. We have to persuade clients to choose us for compelling reasons rather than costs: this is how we manage our business differently to deliver a better service.”
However, is competition from the high street making it harder to innovate and invest in capital, or is this a myth?
“To some extent it is a bit of a myth. The high street has a number of compelling brands, it’s all there. If you are running a staff restaurant, you have a number of challenges that the high street does not. We have to pay VAT, for example, whereas the high street doesn’t. We have to offset costs and whilst nine times out of ten the contract is subsidised, you still have to make the offer attractive.
“But success breeds success. Location is still paramount for brands; if you are looking for a coffee you look around for the nearest one. In a foodservice environment it is more to do with the atmosphere of our team, food choice, delivering what clients want and enjoying what we do. We have included brands like Starbucks and Costa because they add value where you are capitalising on the brand’s market dominance.”
In addition to his underpinning vision for people development, the company’s strategic focus has been repositioned to focus on business and industry and education. Moving away from healthcare and other segments where Host was represented was a decision driven by the fact that these sectors tend to be more price driven than service driven. More broadly, the focus is on strengthening the company’s national presence through mergers and acquisition, where they can add value.
“Our strategy is a five to ten year strategy and if you ask me where we will be in ten years, who knows? But in the meantime there is ample opportunity to capitalise on our growth strategy here and now by offering something compellingly different.”
There are many peers, observers and analysts who will watch Host’s progress with continued interest.