Elisabeth the Chef
Elisabeth the Chef began as a little cake shop in Leamington Spa in 1928. In 1969 it opened its first manufacturing plant and began to supply retailers including Harrods and M&S. By the 1990s Elisabeth the Chef had become a leading manufacturer of branded and own label chilled bakery produce, hot puddings, desserts and celebration cakes. It operated five factories in the West Midlands area and had a strong track record of innovation.
Primary approached David Owen, the majority shareholder of Elisabeth the Chef, in June 1997 as part of an origination programme looking at UK-based food manufacturing businesses. Notwithstanding a continuing dialogue, it was not until June 1998 that the business was finally marketed for sale. As the existing managing director was seeking to retire, we supported the £30 million management buy-in of the business in March 1999.
The Big Idea
We believed that there was significant opportunity to broaden the customer base and diversify the product range. In particular, we felt that there was considerable opportunity in further developing a range of premium chilled dessert products where operational complexity provided significant barriers to entry. In addition, we identified an opportunity to sell non-core assets to fund re-investment in specialised production equipment which was critical to the overall strategy.
The Grand Plan
We broadened the customer base to cover four of the major multiples (Asda, Sainsbury, Morrisons and M&S) thereby reducing customer concentration. We invested over £1.5 million per annum in capital expenditure to enable expansion of the product range and assist in product innovation. We repositioned the business as a premium added-value product manufacturer with high technical expertise, thereby attracting a higher profit multiple on exit.
The Bottom Line
During our ownership, Elisabeth the Chef increased sales from £43 million in 1999 to £65 million in 2007 notwithstanding unprecedented food price deflation during this period. The company was sold to Groupe Senoble, a family-owned French company, in September 2007, generating a return of 2x cost.
Date of investment: March 1999
Deal status: Realised
Date of realisation: September 2007
Investment return multiple: 2x cost
For more information talk to: Charles Gonszor or Neil Wallace