It’s close on midnight as I stumble into the Putney branch of Domino’s Pizza after an evening spent sampling London’s nightlife. The streets are quiet, the shops and restaurants next door are closed, but Domino’s is heaving.
Customers wolf-down chicken strippers and Texas BBQ pizzas relentlessly, as order after order fizzes through the ovens and into the hands of a phalanx of helmeted delivery riders who race into the night on turquoise scooters.
A fortnight later I again find myself enjoying a slice Domino’s finest fare.
This time the setting is less frenetic, the hour more reasonable and my host far more seasoned than 20-somethings enjoying a snack after a night out.
‘The thing about Domino’s pizza is that it always tastes good,’ says Lee Ginsberg, the pizza chain’s finance director, as he enjoys a lunchtime bite at the AIM-listed company’s head office in Milton Keynes.
There are not many South Africans holding such senior positions in the UK, but for Ginsberg the Domino’s financial hot seat is just the latest on a long list of high-profile and challenging roles, where he has dealt with everything from collapsed share prices and property fraud to private equity buy-outs.
‘The profession was never for me,’ says Ginsberg, who left Price Waterhouse in Johannesburg shortly after qualifying in 1983. ‘I needed something more forward looking, something more commercially orientated.’
Judging by his track record, ‘commercially orientated’ and ‘forward looking’ is just what has landed on his plate. By the age of 28 he had already taken on his first financial directorship, and since arriving in the UK in 1993 he has overseen the turnaround of Signet Group, the clean-up of fashion retailer Etam and the de-listing of Holmes Place.
With his diverse experience and business acumen, Ginsberg jumped at the opportunity to join Domino’s when the rapidly-growing pizza company began the search for its first fully-qualified finance director in 2004.
‘Domino’s is only listed on AIM and it is much smaller than the companies I am used to working for, but the opportunity for future growth and the company’s overall potential is very exciting,’ Ginsberg says. ‘For an AIM company, Domino’s business reporting and management reporting is very, very good, but there is a lot of potential to enhance that. Attention to detail is critical and that is what I can bring to this organisation.
‘Domino’s is doing well, and long may it last, but attention to detail is vital and there is no harm in me bringing this to the attention of the troops – letting them know what the proper drivers are and what the variances around budget and expectations are about. You have to know the numbers and you have to know the detail so that there are no surprises.’
Although this solid financial background and classic FD discipline was undoubtedly one of the main reasons why Domino’s recruited Ginsberg to the board, the real attraction was perhaps his experience as the finance chief of Holmes Place – where Ginsberg learnt the hard way just how much rabid, unrestrained growth can hurt.
When he joined Holmes Place plc as FD in 1998, the company only had 13 clubs in operation and a small, relatively simple financial structure. By the time Ginsberg departed almost six years later, Holmes Place was running 85 clubs, there had been two rights issues and the company’s debt facilities were substantially larger.
‘You do your homework before joining a company, but I certainly underestimated the potential for sheer growth in those early stages for the health club market,’ Ginsberg says. ‘We had two rights issues where we went back to the stock market to raise further equity. We took the senior debt lines from £5m when we started to a peak of £210m. There was huge activity all the time in the company.’
As it turned out, it was activity that ended up spiralling out of control. The health club industry hit a wall towards the end of 2001 because it had expanded too quickly, which eventually forced Holmes Place into going private.
‘All the health and fitness clubs ran into difficulty towards the back end of 2001. We started having pressures in our share price and we looked to take the company private as a result of that,’ says Ginsberg. ‘We had all expanded too quickly and I think there were some good lessons to be learnt from that for companies that grow too quickly.’
It signalled the beginning of what Ginsberg describes as one of the most ‘torturous’ periods of his life. With the share price struggling and the private equity wolves snarling at the door, Ginsberg was made deputy chief executive while continuing in the role of finance director.
‘It was quite the most torturous process to go through to run the business,’ Ginsberg recalls. ‘I was FD and in the position of deputy chief executive so had all the other functional areas reporting to me except for marketing.
‘It was a very broad role during a time when the business was faced with incredible competitive pressures at the same time as trying to go private. It was painful but hugely enriching and rewarding as an experience.’
Eventually, in July 2003, a deal was secured to take Holmes Place private and within 12 months Ginsberg had moved on.
It may be over a year since Ginsberg left Holmes Place, but the scars are still fresh and one senses that the lessons learnt will not be forgotten, especially with Domino’s expected to undergo significant growth over the next decade.
In its last set of results Domino’s delivered a 38% increase in pre-tax profits and analysts are anticipating growth of 13% for the year ahead. Ginsberg, meanwhile, says the company is aiming to open 800 new stores over the next 10 years, which will boost the company’s current £4.5m in the bank by an estimated £10m to £15m a year as profits and cashflows grow.
It is mouth-watering prospect for investors and the board – but Ginsberg is determined to keep his feet on the ground and ensure that another Holmes Place scenario does not emerge.
‘The ability to see around the corner is an important issue we need to focus on with this business. Having had the experience at Holmes place, where nobody saw the inevitability and the consequences of growth that was too fast, I have learnt to independently test and critique the “what if” scenarios,’ Ginsberg says.
‘While we have a fantastic path of growth ahead of us at Domino’s, those measures will be good to challenge the business with, just to see that we maintain our path and strength in the market as a brand leader. What is going to be key is how successfully we can predict what’s coming round the corner.’
The Domino’s FD will be hoping that ‘around the corner’ the Putney Domino’s store. and the 369 others, will continue buzzing late into the night for a long time to come.
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