Growth is easy, keeping your culture isn’t ☕ | Lydia Snape

It was always the plan because I had this vision. Why does great coffee, great food have to be mutually exclusive? But also I had this feeling of as you grow, as you scale, why can't we keep that heart? Why can't those fundamental values still remain really important to the business? Because I'm sure you've seen it. We've all seen it. Businesses scale and different parts of the business suffer as a result. So I really had this, this itch to prove that wrong and say that it could be done.

This week's Millennial Masterclass. Next up is Lydia Snape, founder of Warwick Street Kitchen. Lydia isn't just building another café chain. She's on a mission to prove that you can scale a hospitality business and never lose what makes it special. Her story starts on a stage as a rock band frontwoman and leads to running 3 locations with a 4th on the horizon. In this episode, we talk about building systems that free you, not trap you. Why most growth kills culture and how to fight back. Her lessons in hiring, letting people go, and knowing when to step back. And the numbers every founder needs to track. Millennial Masters is brought to you by Jolt, fast, reliable web hosting built for founders. Whether you're launching a WordPress site or scaling an app, Jolt gives your project a rock-solid home starting from just £3.95 a month. You'll get 99.99% uptime, support in under 30 seconds, and flexible payment options including Bitcoin and Amex, so you can rack up those points while you build. Get your first 3 months free at jolt.co.uk. Smart hosting for people building what's next. Lydia, welcome to Millennial Masters. How are you today?

I'm really good, thank you. Really excited to be here. Thank you so much for having me.

Likewise, thanks for joining. So let's go straight in because you work in hospitality now, but you used to be in a rock band. So I'm wondering, what's the story? How did you end up from fronting a rock band to opening your first cafe?

That is a blast from the past. You did your research. Well done. Um, yeah. So from the age of, I think I was like 13 when I joined the band. And that was, that was the plan. That was the whole thing. Like education fell to the wayside, relationships, all of it. Like that was all plan B. Plan A was I'm going to be a rock god and Unfortunately, I don't have a best-selling album. That didn't work out. But the thing about being in any creative industry actually is that more often than not, you need a job to pay the bills. So hospitality was something that I fell into because it was shift work, because I could fit it around touring or practice or gigs or recording. And you know what, it just, it just made sense to me. Like, it just, I never had, no one really had to ever explain the operational side of it to me. I just got there and I was like, yeah, I'm good at this. I can make this work, which sounds a little bit arrogant, I guess, but then when the music— Yes, yes, it is. So then when the musical thing didn't work out for me, I ended up— I actually went into a corporate job for just over a year, which was the single most miserable year of my life, by the way. Like, it was awful.

What sort of job was it?

I was in recruitment. I was recruiting substitute teachers and lecturers into the education sector. Which, yeah, it just sucks. It really sucks. There's no other way of putting it. It didn't suit me at all. So I left that, you know, with, uh, we, you know, me and my now husband had a mortgage to pay, but I left that and was like, I'm just going to go work in hospitality again while I figure this out. And actually just found that I was like, no, I love this and I am built for this and I am really good at this. So took that confidence and that pride and worked my way up within an independent small group of businesses, did that for like 7 years. And then was like, no, it's time to do me. It's time to do my own thing. I've got a vision here. And yeah, that was 8 years ago. And then I opened Warwick Street Kitchen in 2017.

So what was the vision that you developed over 7 years in working through the ranks in a, in a cafe? What did you want to do differently with, with your own venture?

So I was always frustrated that really great food, and I mean really great food, like fresh produce, seasonal, cooked by like really talented chefs. I was always frustrated that that was reserved for special occasions or the evening. You know, why was it that if you went and got a great coffee, which you could do and have been able to do for quite some time in this country, when you went and grabbed a great coffee, more often than not, the food was an afterthought. It was like a a soggy panini in a plastic bag, or, you know, like a really bad dry cake that'd been out for days. And I was frustrated that in order to like nourish yourself or have good food, you, you had to choose, is it coffee or is it food? I knew there were other places around the world certainly doing it. Like me and my husband, we always travel and we always try and— I'm obsessed with cafe culture. So we're always getting inspiration from other cafes around the world. And I knew that London was catching on, Manchester was catching on. And I just thought someone needs to do this in the Midlands. So why not me?

And I think you're, you're right about the food being an afterthought, even in the chain cafes, everything is kind of like mass-produced and you get like a toasty or a panini, which is rather bland. So, and you called your cafe a kitchen rather than a cafe as well.

Well, I actually can't take credit for that. That's— that was a glorious thing that kind of just fell into my lap because the business was a deli. Someone had already created Warwick Street Kitchen and it was a deli in the heart of Leamington Spa. And they served like— I think they did like coffee and tea and stuff, but it was mainly sliced meats, chutneys, cheese. You'd go and get it. And it was on a street called Warwick— still is on a street called Warwick Street. And he had called it Warwick Street Kitchen. But wasn't really doing much with the kitchen, if you ask me. So when I got there and I saw the location and decided, yeah, this is the place, there was a decision. It was a very quick decision to be like, oh yeah, let's keep the name. It works. And it has actually been the foundations upon which this brand has been built, which is interesting.

So did you buy the business or did you, or the premises? You took on the premises and kept the name? What was the process?

So I didn't buy the full business as a going concern because actually the business's books weren't great, which kind of worked in my favour because I got it at a bit of a bargain, to be honest. So I bought the fixtures and fittings, the right to use the name, the website, and yeah, the lease, the tenancy. But then I did start my own limited company, didn't actually take on any of his company history or anything like that.

So for anybody thinking of going into this business, What was it like to, to be a woman opening a café and a tasty kitchen alongside it? It can't be just that straightforward, was it?

I think so. There's two elements to this. One is that I've definitely noticed with hindsight that I think I will have been treated differently being a woman. At the time, it didn't occur to me. I can tell you a couple of stories there, but let's— I think I went into the whole endeavour With my eyes relatively wide open because I had worked for an indie, let's call it a chain or a small group. So I had already seen the challenges of running that kind of business. And the owner of that business as well was great, by the way, training me and then trusting me. So I really did have a lot of knowledge about running the business operationally. So there weren't any big surprises about that. In terms of like the, the being a woman, I remember walking around, being shown a location in Stratford-upon-Avon, actually, where we didn't open. Where the estate agent asked me, so are you going into business with your father? Are you going into business with your husband? And I was just like, no, no, it's just me. That again, it didn't really strike me that much at the time. So I'm not the kind of person that will like dwell on it or be offended. If anything, it drives me that it's like a chip on my shoulder. And I'm just like, I'm going to show you like that estate agent has since, because Stratford is quite close to Leamington, has since been into the cafe and said to me, I missed out there, didn't I? Had the chance to have this in Stratford. And I was like, yeah, you did. So I still like know this person. And by, by his own admissions, definitely underestimated me. Yeah. There's, there's casual everyday sexism, like suppliers calling you darling, babe. There was one supplier that used to come in and like kiss me on the cheek and like touch me a lot, which I, again, I think women, we just become blind to it. And however sad that is, we just get used to a certain generation or a certain type of man who thinks he has the right to do that. And I remember there was one day where George, who was the head chef at the time and is now my exec chef and business partner, he saw it happen and he was like, what the fuck was that about? Like, and I was like, yeah, that, that is weird, isn't it? And we actually then stopped working with that supplier because it was weird. But yeah, you know, unfortunately we do just have to deal with this everyday sexism quite a lot. And I think we can choose. It's a very, uh, now these days it is a very conscious decision to just let it go and not let it ruin your day or affect your career or your business. Rise above it. There are definitely times where you need to put your foot down and make a point of saying something, of course. But for example, with that supplier as an example, I don't need to stand there and shout at him and rant and rave. I can just take my business elsewhere.

Which is what you did.

Exactly.

So going back to your first year in business and making sure that now you, you opened your, your first cafe, how did you go about marking your presence and making yourself known? What were the growth levers that, that you were pulling? Obviously you had experience, you, you were doing some great food alongside good coffee, but at the same time, competition is tough, especially when there's so many chains about and people have so much choice at the moment.

So I think, again, it's one of those things that I've reflected on a lot more with hindsight. I think that we did a really good job of knowing our market. So Leamington Spa, they have chains, but actually gloriously so, they're not that busy. People in that area do like to support their independents. So I was really present in the early days and it was quite quiet early days. So I would spend my time building really meaningful relationships with the community, customers that still come into this day, because that business at that time had no marketing budget. I'm not saying I have a massive marketing budget now, but it just didn't exist. So my single most powerful marketing tool was word of mouth. It was the community. So I had to build that relationship. Then it became, I mean, this is 8 years ago, and it was when, um, Instagram was a very different thing to what it is now. But at the time we had great success with using Instagram. The visual side of what we did of showing the really beautiful food and the really beautiful produce. That was what made us different to the other cafes in town is that the real high quality produce that we were using and the high quality coffee and food that we were churning out during the day. So we used that platform obsessively. I mean, we still do. It's probably our main marketing tool, to be honest. And then off the back of that. We did some evening events, or we still do, but we started doing evening events where they were almost like ticketed. And because it's quite a small cafe, it created this frenzy of, oh my God, you have to get a ticket to Warwick Street Kitchen's tapas event. And that again, it just became, there wasn't anybody else in town doing that kind of thing and like really celebrating produce and food in that way. So like I said, that, that frenzy of once it's sold out, it's sold out, and then you've got to wait till next month, that worked really well for us. And that was like a real turning point in terms of momentum, in terms of our reputation in the town.

So you now have 3 locations, one of which is also a wholesale bakery, and you're looking for a fourth. So I'm wondering, at what point did you realise, okay, I need to scale this and open a new location?

So it was always the plan because I had this vision Like I said about why does great coffee, great food have to be mutually exclusive, but also I had this feeling of as you grow, as you scale, why can't we keep that heart? Why can't those fundamental values still remain really important to the business? Because I'm sure you've seen it. We've all seen it. Businesses scale and different parts of the business suffer as a result. So I really had this, this itch to prove that wrong and say that it could be done. So actually what happened was It fell into my lap, to be honest. So I live in the Jewellery Quarter in Birmingham city centre, and my day off cafe was a cafe called Saint Kitchen, which is just around the corner on St Paul's Square. And I used to go in, like I say, day off, you're in an early stages of a business, you're sat there doing admin, you're inputting information.

There is no such thing. Yeah.

But I'd sit there with my laptop and I'd eat, I'd eat my food and I drink my coffee and I just got to know the team. And one day the owner. It was about a year and a half into owning Warwickshire Kitchen in Leamington, came up to me and said, do you want to buy Saint Kitchen off me? And it, well, it never occurred to me. I'd sat there and been like, oh, if this was my cafe, I'd do it like this. I'd do it like this. But it never occurred to me. I thought he was happy. I thought he had a good thing going. And I was like, yeah, okay, let's go. And at that point, that was when now my business partner, George, the chef, approached me and, well, I'd already had conversations with him about how do we make this a permanent thing? How do I get you to be even more bought into this business? Because he was already super bought into the vision. And that was when it was like he had investment into the business that then helped us expand and purchase Saint Kitchen and make changes to Saint Kitchen. So it was something that I knew I wanted to do, and it was a beautiful opportunity that came along at the right time when we were ready.

The universe provided And that was before the events of 2020, which changed the world, weren't they?

Yeah. So go on.

Well, I'm wondering first, before your third location, how have your founder dynamics changed when you brought in, into the business, your head chef as, as a co-owner in that space, and How did you start dividing your attention between the two locations, which there's, you know, physical distance between them? They're not even in the same city.

Well, the founder dynamic thing, to be honest, never really been an issue because I knew, like, I'm no chef. I don't even really enjoy cooking for myself. I love eating and I know good food, but I had always trusted him with that side of the business. That was always the conversation. It was like, this is, you know, you're the head chef. This is your zone. We talk and we collaborate and he takes on feedback and vice versa about, about front of house and operations. So really it was just, are you ready to take on more responsibility as well? And he was like, hell yeah. Cause he is, he's like that. So we have a pretty good division of labor or understanding what one person is responsible for and the other person isn't. Sure. I'm sure there have been misunderstandings along the way, or we've trodden on each other's toes and stuff, but. We just generally have the kind of relationship where we can tidy that up quite quickly, I think, and just have an honest conversation. He's certainly not afraid to look you in the eye and tell you how it is. So that definitely worked in our favor. And then in terms of spreading time, like I said, I'd worked for a business that had several sites, so I knew the importance of team. I knew it's the, it's It's almost a cliché because people say it so much, but also it's worth repeating again because I still meet people every day. I do little bits of small business coaching and I still meet people every day who are like, how do you do it? How do you trust people on days when you're not there? And it blows my mind. And that's why it's worth saying it's all about who you hire and it's all about how you train them because you can hire the best person in the world, but if you don't explain to them, this is the standard. How are they going to know? They'll do what they think is best, but ultimately it might not be what you want for the business. So you need to have that buy-in to the standards and the values of the business. So we had hired and trained a really great team. Some of them are still here to this day, but yeah, that was coming up to like 5, 6 years ago when we—

which is remarkable in hospitality where there's quite a big turnover.

Yeah, absolutely. And there have been a lot of new faces, of course, but we do still have at least 3 people in the business, key people that were with us when we expanded from 1 to 2. And we trusted them. Now, don't get me wrong. Absolutely were like George and myself. George is the exec chef that I'm talking about. There were days, weeks at a time where we were pretty absent, but never more than a phone call away or a text away. And I'm sure that the team felt some pressure. I'm sure that they felt a bit of stress, but I, and we obviously learned from this as well in terms of. Having better processes to leave behind you. But there is a period of time after you open a new site where the understanding is that your attention is on that new site. And you can call me if you need me. And sometimes people do, but 9 times out of 10, people are like, I want the challenge and I want to be able to figure it out. If you've given them the right training and you've hired the right person, they will try and make good decisions. And if they don't, that's cool too, because you, you have the right people to have the conversation about, okay, maybe not quite the right decision. What can we do differently next time?

And when was the point then that you decided, okay, we're handling two now, we've kind of like nailed this system, but we, we, we're going to go into a holy trinity now.

So that was Well, we've, it's been open 3 years and it maybe took us 9 to 10 months to like find the place and refurb the place. But I just remember having a conversation with George one day in Saint Kitchen where we was talking about natural next steps. And for us, because we make so much, well, we make everything, everything is homemade, all the breads, all the sauces, every element. And it was like, actually, at some point we're going to have to centralize some of this production. Otherwise, every time we open a new site in the future, we'll have to hire 2 bakers, 2 bakers, 2 bakers. Bakers, whereas actually, what if we centralised the production and had like 4 or 5 bakers that just baked all of these things for all of the sites? And then we knew that it was consistent. You know, we had the right equipment as well, because you have to have a purpose-built space for a lot of these things. So then we started looking for places or spaces that had the right space to do that. So that was the conversation, right? This is the natural next step. Now we're looking for the right place. And that was the first time we'd gone looking rather than actually buying an existing business or place that was already a cafe. It was the first time we'd actually like purpose-built a space. It was a, it was a shell. It was actually a Costcutter supermarket. So we had to completely gut it and rebuild things. And that was to date the single most stressful experience of my life, because as we were doing the refurb work, that was when we were just coming out of the pandemic and we were hit by all sorts of price increases. That was also the January when we got all of the implementation of the Brexit-related price increases. So we literally had examples of getting a quote on extraction, for example, the kitchen extraction system based on being able to source steel and metal within the UK to halfway through the project being like, oh, actually no, we can't sort this or we can't import it. I can't remember exactly the details, but it was like, we can't import it at that same price anymore. Oh, and there was the whole Suez Canal thing as well. We had an oven stuck on a, on a boat for weeks. Yeah, we can't import this metal at the same price anymore. So actually it's going to be £10,000 more than we originally quoted you. And the whole project went like 30, maybe even 40 grand over budget, which we just did not have, didn't have it at all. So mid refurb, I had to sit in front of a bank and try and explain to them why a hospitality business coming out of the pandemic should get 'Can I get a £50,000 bank loan?' And they all say no, by the way, but I managed to make one of them say yes somehow. And that is just how we managed to finish that project.

Before that though, how did you manage to survive and thrive through the pandemic in order to then start thinking of further expansion rather than kind of like staying put and just making sure that you can maintain what you have? Or was that a catalyst and you realize that you needed another venue in order to push through.

How much do you mind swearing, by the way?

We've already done it, so I'll mark the episode as explicit.

The answer to the question is hard fucking work, hard graft, because during that period in the pandemic, yes, obviously there was a period of time where we had to close and then we were allowed to do takeaway only, and then we were allowed to do outdoor seating and the goalposts, the parameters, what were constantly moving, but what you also had was furlough and you also had grants and there were COVID loans, which actually we didn't take any and in hindsight should have, but I was just so concerned with, we're going to come out of this not in debt, but I've shifted my mindset around that these days. So it was actually about just working so hard and being like, okay, what can we do? We can do takeaway only, right? Well, we're going to do the most meaningful takeaway only that we could possibly do. So in Leamington, that was every Friday night. We did like meal boxes where it was a different theme every Friday. So burger night, we did pizza night, we did, and it went on for months. So the chefs were constantly coming up with ideas. And I'd built this mailing list of loyal fans who just every week would buy that box. They'd turn up with their masks on and their gloves and they'd be a one in, one out, pick up the box. And there are people I can see, cause I used a Shopify account. Who spent thousands of pounds with us over that time. And I constantly remind them of that and thank them of that because they kept us alive. And then there was Saint Kitchen where we could do takeaway only and nobody else in Birmingham was doing coffee and cake to takeaway. So we would have queues around the block of people that just wanted a nice coffee or a nice cake. So really it was about showing up when a lot of other people weren't because people treasured that and they still mention it to this day. Like, you were here for me on my mental health walk around the block. I remember getting a coffee and somebody smiling at me and making me laugh. And I'm grateful for that. We were inventive and whatever the rule was, whatever there was, you can do this thing. We did it and we did it to the max in the most safe and responsible way that we knew how as well. So that obviously took a lot of work and strategy behind the scenes of which, yeah, I did a lot of the marketing, a lot of the organizing. George and his team of chefs did so much work in terms of researching foods and how to get produce as well, because a lot of our suppliers also weren't supplying food. We'd call them and say, can we buy this thing off you? And they'd be like, nope. So they were also really ingenious with sourcing products. So yeah, the easy way to say it is real hard work, but so much went on behind the scenes. And then because we had been utilizing furlough, because you obviously needed fewer people during that time, and we were also getting government grants. And we were also killing ourselves to maximize revenue, we actually came out of the pandemic having made a profit and chose to use that profit on opening another site.

But you also said that possibly that was one of the shifting points on how you looked at debt, because you said you took on finance in order to purpose-build this entire new operation for the bakery. Why was the shift? What, what made you change your mind about it?

Necessity. Because it was, it was either we find some money from somewhere right now, or we're going to have sunk these costs that we've put into this and we're going to lose that hard-earned profit that we had sweat so hard for. I mean, I'm still struggling with it in my head mentally, the idea of taking on more debt to open another cafe, but actually I've just lived it and seen that actually It's fine because we just factor in the loan repayments into our monthly P&L, and we know that we have to make this much money to cover it. And we're in the fortunate position now where in the early days I had to personally guarantee all of this. And I think I was a personal guarantor on the original loan, but I am now, I'm now not. The business now holds that guarantee.

That's the daunting part, isn't it?

Absolutely. Yeah. That, and that's the bit I think where I was like, nope, don't want to be in debt. Cause I've, I've been brought up in a, in a culture or a family where we never really talked about that. So I was just afraid of it. And actually knowing that you have, we have items of value within the business. We have things that we can leverage and just being comfortable with that as a concept is a practicable skill, I think.

For many people running a cafe might sound romantic, but by your Third one, you realized you had to get seriously good with numbers. What numbers do you track and make the most meaningful impact in your business for hospitality? Because I have a feeling that they might be going across multiple industries, and it's just the same sane business sense that gets applied across the board.

Totally. I think, I think that you won't be surprised by what I'm about to say. I think that it's the first thing I say to people when they say, oh, running a cafe must be so much fun. I'm like, yeah, it is, but it is running a business and you need to understand the following: your gross profit margin. So understanding your cost of goods and your overheads, what they cost, and then ultimately everything whittled down after that to get to net profit and to understand where you sit. These days, looking at it on a granular level, as close as daily. In terms of like labour on site, because we obviously have a lot of people on site. So it's like, are there days where we are literally burning money to be alive? And if so, I would rather answer the question of how do we make more money rather than let's fire people. And then—

Or cut corners.

Yeah, well, exactly. That's the other thing. It's like, there was only— it gets to a point when there's only so much money you can save. Like, we can talk for a while about where you can save money if you want, but ultimately, if your standards are high, which ours are, there's only so far you can get on negotiating the product price. And if you want great team members, that comes at a certain price as well. So ultimately, the conversation becomes, how do we make more money? It goes from one way to the other. And I'd rather have that conversation at a certain point, but ultimately understanding every month, looking at outgoings and thinking, is this the most cost-effective way of doing this? And it's the really unsexy stuff. It's who picks up your bins, who does your waste management, it's who is your card merchant, who takes the percent off you every time someone taps their card. It is how many different bits of software are you utilizing? Can this be amalgamated down into one that does all of it, for example? Because it becomes a conversation about who are you willing to negotiate with and who are you not willing to negotiate with. Because we work with some really fantastic local suppliers or really great like suppliers in terms of where it comes from, like regeneratively farmed flour. I don't necessarily want to call those guys up who are doing something great for the planet and go, yo, can I squeeze squeeze even more money out of you? Do I want to call up PayPal and say, hey, can I have a better percentage on my card transaction fees? I would much rather have that conversation. So yeah, looking at all of those costs all of the time. And if anybody says, and this is any people that I do bits of coaching with, they say, oh, I don't have the time or the capability to do that, I will call bullshit on that really, really quickly because you can't afford to not look at it because there are so many small incremental changes. If you saved half a percent on all of your overheads, somehow that adds up, doesn't it?

Especially when, when you're running across 3 sites.

Absolutely. Yeah. And the thing as well, the privilege that comes with that though, as well, is you get more negotiation power. I accept that. So if I'm talking to someone who only owns one cafe or one restaurant, and I'm saying, call up your card merchant, as that example again, it's harder for them to negotiate. I understand that. But if you have an understanding of your numbers, and if you know, well, actually last year I've shown a 25% revenue increase. So if I do 25% again next year, my business with you is going to be worth X. That's a really compelling negotiation conversation. So it all stems from understanding your numbers.

So I take it from what you told me that people have noticed your success in the industry and have been coming to you for advice and you've been doing some coaching, but you also ended up putting everything into a course now.

Totally. Yeah. I mean, so first of all, yes, and it's really flattering. And I'm constantly dealing with this imposter syndrome, by the way, of like, well, why would they come to me?

Don't we all?

Exactly. It's like, that's the thing, you know? And ultimately you, you have to not let it like stop you or you, you like, I started a podcast as well. I got it from the podcast. Maybe you can relate to that too, of like, why would somebody want to listen to me? But you put it out there and people do want to listen. So there's your answer. But yeah, people would come to me and they would say, um, I really want to open a cafe. It looks great fun. Can I pick your brain? Or I run a cafe. I'm really struggling. Could you help me? And there is, of course, a certain amount of advice, especially now, actually, since April 1st, that I'm willing to give for free. And I just want to help the community and I just want to provide as much value as possible because I don't want to see indies closing down as frequently as they are. But at the time, I just thought, well, my husband's a camera operator. He's got all this great equipment at home. I've got the knowledge. So what happens if I just record it and put it out there? So I wrote this course, it took me quite a long time. We recorded it and put it out there. And now it's just like a, when people do approach me and they say, you know, can I ask you about X, Y, Z? I'm like, look, here's the, here's the sort of base level help that I can give you from here. But also if you want more, here's the course, because then you get 3.5 to 4 hours worth of me just telling you everything I know. And hopefully there's, there's, well, I know there's value in that because people have used it and implemented it. I know one cafe that bought it and asked, do you mind if I show it to the whole team? I was like, of course not. And they show it to their entire management team before they become managers.

And I'm guessing it's also nice to hear back from some of their success stories when they implement your advice.

Absolutely. There was one bit of advice I gave a guy, which, and I think sometimes it's just about seeing a business through someone else's eyes as well, isn't it? You know, you get so bogged down in the day-to-day, you forget to look at your business. And I'm definitely guilty of this as well. You forget to look at your business through customer eyes or with fresh eyes. His business was on like a main junction by like 4 sets of traffic lights, and from the outside you couldn't even tell it was a cafe. And I was like, just paint on this wall, coffee, brunch, cake, because he had a really cool like, um, brand font. And he was like, really, you think that'll make a difference? And I was like, how many hundreds of people do you think sit at that traffic lights every day? And he did it. And then he's told me recently that they saw something like a 20% increase in revenue within like 7 days and I was like, whoa, that's wild. So that's really cool.

So not small, but simple changes can make a significant difference.

Absolutely. And like I said, sometimes it just takes a fresh set of eyes to look at it without the emotion that you have invested in your business as well. And that's why I think a third party can be really, really useful in terms of keeping you accountable and reminding you to look at your business a little bit differently.

But isn't there a risk that they could become defensive and reluctant to change despite all the good advice that you would give them?

Totally. Yeah, totally. I worked with one person where that certainly became a problem and I just ultimately said to them, I mean, sometimes, I mean, I will definitely do it. You can get defensive and then you go off and you reflect and actually you realize, no, this is, this is coming from a good place. And I think in this industry especially as well, we are surrounded by really passionate people. People get into hospitality because they're passionate about it. So it is so wrapped up in emotion. But one, you can just revisit it and just be like, why are we here? Why are we having this conversation? Because you wanted to make a change. And ultimately you can choose not to listen to me. Absolutely. But you have in these like one-on-one coaching scenarios, you are paying me for this advice and for this perspective. So if you don't want to take it, don't take it. Fine. But I often find that the harder you push somebody, the more they come back because it's a love language. Pushing somebody is a love language because you challenging somebody, saying you can do better and I care about you and I want you to succeed. What is more caring than that? In fact, the opposite way, wrapping it in cotton wool is limiting somebody and they appreciate it. They go away and they think about it and they appreciate it.

You mentioned a key date in the business diary here in the UK, April 1st, not just April Fool's Day.

Unfortunately not.

But also a range of changes across the UK legislation which are impacting both large businesses, but everybody really in retail and hospitality. And I know you're, you're very passionate about that. And you said you don't want to see independence going under because of these changes. Can you, can you give me a brief breakdown of what has been changing and what the impact is?

Sure. So, um, the government increased minimum wage, which happens every year, but it was, um, an unprecedented amount of money that they increased it by. And I want to precurse this by saying that I am a massive advocate for a meaningful minimum wage. I love that somebody can work a full-time job at minimum wage and take home what is now a relatively meaningful salary. Like, that is awesome. But the industry has been built on paying people a certain amount of money, and that transpires into then what we charge customers, what customers are used to paying. So the entire business model of the industry has been built on this certain price of labour, and then it gets increased. Exponentially overnight. Well, we knew it was coming, but overnight. And okay, cool, love it, here for it. So we increased prices, but I did the maths on that and I tried to break it down into things that people would understand. And I did a video and it's still available on my Instagram, but people went wild for it because I think because of where I broke it down, which was, okay, if you have 10 full-time employees, it costs this much more. Which if you are a cafe like ours, for example, you would have to sell an additional 400 croissants per month just to cover this. That's not to make profit. That's not to, you know, to remain at the same level where you are. Exactly. And that blew people's minds. So that's why I talk about, okay, how do we make more money? Because I don't want to— other people might, and that's if that's their decision, that's fine, but I don't want to. Sacrifice the quality of the ingredients that go into that product. And I don't want anybody to lose their job. So, okay guys, we need to sell. All right. It's not 400 croissants. You can make it any number of things, but we need to sell more of XYZ. We need to increase average spend. Business rates have also, when I say increased, so we have something called small business rates relief in the UK, which has been, I mean, I couldn't even give you the key dates on that, but what has happened is that the government lifted that rates relief. I can't remember the percentage, but it went up. But an example, real world example, Saint Kitchen in the Jewellery Quarter, yearly we paid £2,800 in rates, business rates. It's a form of like council tax, I guess. And it's gone up to £6,800 a year.

So trouble.

Wild. Absolutely wild. And it's like, where do you think this is coming from?

More press hounds.

More croissants! And then they also increased National Insurance contributions from the employer perspective and lowered the rate at which you start making National Insurance contributions. And from an employee perspective, it's lowered the threshold. So you're taking home less of that pay, but they also got a pay rise at the same time. So I think that actually it works out okay for them. So all of these things all in one go, all of a sudden, a business like mine is looking at, okay, well, we need to find another £56,000 a year. Which coming out of the pandemic and coming out of what we've been dealing with, a lot of businesses—

the cost of living crisis.

Exactly.

And we know that the prices both for energy as well have had a big impact, including on your suppliers and the cost of produce that you're sourcing.

So we're looking at like £56,000 extra a year that you're just meant to find or just be willing to say, if you were fortunate enough to make a profit, okay, well, we're not going to make a profit. So obviously we increase prices, of course we do, we have to, but all of our customers, all of our community are facing the same challenges. So they are also trying to think about how they can save money. They might be thinking about going out less. So that's a challenge, but the plight or the campaign that I have chosen is that we should, as an industry, be getting a reduction in VAT. And the reason that this is the thing is because it's proven that it works in other countries. There are countries such as Ireland and Germany, which are currently running a reduced VAT percentage for the industry.

And there was a scheme during the pandemic, I recall, where the VAT was reduced as well.

Absolutely. And here's the thing is that I think a lot of— when I sat in front of one of our local MPs and he was basically hearing, oh, so you're asking for a handout, I was like, no, no, no, no, no, you're misunderstanding me. Because actually, if you reduce— and I did some maths for him— if you reduced our VAT down to like 12.5%, that looks like X amount of money. And I'm sorry, I can't remember what the amount of money was, but I was like, that right there is somebody's salary for the year. So there's another person getting a job who will pay income tax and go out and spend money in the economy, and they're not claiming benefits or whatever else it was they were doing. And we're saving money so we can spend more on marketing, which means that in turn we could actually generate more revenue and actually pay more VAT. Wild. So he, this MP, had said to me, oh, by all means put this argument together, but it needs to be fiscally neutral, Lydia. And I was like, cool, like fine. You're trying to blow my mind with these big boy words. I'm following. So we then, I say we, I have then decided that the next step is I'm going to put together another video explaining here's why it has to be VAT, like real time. Here's what it will mean to businesses. Here's what it will mean in terms of what we can then give back to our team, to the community, and therefore generate more revenue, more jobs, which is better for the economy. Because I understand we're in a however many billion pound deficit. I'm not stupid. I understand that we need to prove that this is going to benefit the economy. And then I'm going to write a template letter, one for business owners, fill out the fill in the gap, send it to your MP, and one for customers, fill in the gaps and send it to your MP. Because there is a group called the UK Hospitality Group who are making a lot of noise about this. I'm not the first person that said, give us a reduction in VAT. They are so London-centric that I, I worry that the reason, or one of the reasons why it's not really currently being entertained in government is because there's not enough noise elsewhere. Imagine if the conversation comes up in Parliament and every single MP goes, oh yeah, someone in my constituency said that. Oh yeah, someone in my constituency said that. You're just chipping away slowly at it. I don't think I can change the world., but I have to be able to sleep at night. So that's what I'm doing about it. And, and that's how people can help is by participating in that.

So just to recap this a little bit, then you're fully on board with the increase in the National Living Wage, minimum wage. Now they merged, so there's no fair difference. And it makes sense. It's not necessarily something political. It has been happening for multiple governments for 20-odd years. It's been continuing to grow, and it does have a net positive benefit on the overall society. Then the National Insurance contributions, which have also gone up. Is there room for debate on that one? You think they needed to go up, or is it again to plug gaps when we're looking at the benefit and the health system?

I think that ultimately, okay, let's go back to the pandemic where we got, um, like I said, the grants and the furlough scheme. We always, we always knew that money was going to have to come back from somewhere, you know, and I'm not surprised to see this happen. If anything, we were expecting to have to contribute more tax-wise. My frustration, and here's why I don't think it should be National Insurance, is because actually all in all that's pennies in the grand scheme of things. It's just, it's another drop in the ocean in what was a massive increase. So it's almost like something's got to give, guys, because of the way— and this is the thing I didn't mention and why it keeps coming back to VAT— is the way that VAT works in our industry is unfair when compared to other industries, because so much of what we buy in, we buy at zero VAT. So we can't offset it the way other businesses do. So actually, in terms of when When that thing—

And that comes to raw produce, for example, is that right?

So coffee, flour, spices, chocolate, milk, all of these base level ingredients that we buy and then turn into products that we pay VAT on, we don't buy in with VAT.

So you can't offset it.

We can't offset it. Exactly. So very few things can be offset. If you buy booze, like a pub or a bar that has VAT on it, so they've got got maybe a bit more room there, but really, unless we've bought like a really big piece of equipment or something like that, there isn't much that we can offset compared to other industries where they buy everything in with VAT. So actually they get more offset on their VAT bill when it comes round. There is a massive, massive amount of weight put on the hospitality industry when it comes to VAT. So the minimum wage, National Insurance, that's something that affects effects everybody. Whereas VAT, I just feel like you've got this really unfair burden on this specific industry. And along with everything else that's gone up, it's crippling us.

You also mentioned the rates, the business rates, which there's been a debate for years to be able to look into that system because it's been blamed as one of the things that's been crippling the overall retail industry, especially in their competition with the online retailers who do not have such costs. And like you said, for you, they tripled basically overnight, or maybe with a 6-month notice in your case. But at the same time, there's the argument that the local councils themselves are underfunded again by central government. And It's not necessarily a political matter because it happened during other governments as well. It's not something new, but is there, is there something to work on there? Is there an unfair advantage that again, online retailers have when, when it comes to the business rates?

I think that's one particular area that I am not that brushed up on. I think that because when it comes to what I do, we're talking about coffee, brunch, maybe some evening meals. We're not that plagued by like online competition. Obviously people might choose to get a Deliveroo or a Just Eat delivered to them, but ultimately people really do enjoy going out. So our competition are other bricks and mortar businesses who are facing those same challenges. I know that the system is outdated, and I know that when I sat in front of an MP, he did say, I fully support the reform of of that particular model. I don't know what that looks like though. I think I know that it's based on really like old valuations of spaces and what they mean. I know, and like actually on a—

Decades old.

Absolutely. And on a ground level in terms of what I feel like I get from the local council, two of my businesses fall within what's called a BID, if you know what that is, where like it's a—

Business Improvement District.

Yes. Absolutely. Yeah. And I love those guys. They're great. So yes, I also pay to be part of the bid, but they ultimately also receive funding from local authorities. So I, it's not something that I look at and really begrudge paying. Now it's £6,800 a year. Maybe, maybe I will.

You're looking at it more closely.

But like, for example, what's happening right now, I don't know if you've seen on the news in Birmingham, there's like a national bin strike and we haven't had bins collected in like something like 3 months. It's wild. It's like a health problem, but you wouldn't know about it in the Jewellery Quarter because the JQ bid are doing such great work to keep the streets clean, to keep them hygienic, and to keep people still wanting to come to the area. They do loads in terms of marketing. They do loads in terms of business support. So I guess that depends on which bid you belong to and which local authority you belong to, but it's not one that personally I look at and go, yeah.

So in, in your view, then VAT is the main weapon that can be deployed to level the playing field, at least for hospitality against other businesses, because yes, even on their rent, they get VAT relief, etc. If for the majority of your raw produce that you then turn into a sellable product, you can't claim VAT back, then you are a net contributor to VAT.

Absolutely. I think that a lot of business owners, I've heard them say, I just feel like I'm collecting tax for the government. I feel like that's all I do, which ultimately I try and remind them that is what VAT was designed for. It was literally designed to collect tax, but I understand what they're saying. I understand when everything else has gone up and you cannot possibly pass all of that onto your customer because they'll just stop coming in, it becomes the thing that threatens to bankrupt you every 3 months.

I guess we have an idea of what could change or what would need to change here, but, um, I'm wondering For someone looking, thinking of opening a cafe tomorrow or next month, especially given the latest changes that you mentioned, what would be the first line on the playbook from your point of view, Lydia?

Get experience, understand the industry, because like you mentioned earlier, it's like a romantic idea for a lot of people. And I actually just met somebody earlier today who, who bought a bar because he had this romantic idea that he wanted to own a bar and has been really surprised by how the margins are crazy small on that, aren't they? Exactly. In fact, somebody once said to me many years ago, anyone who has any business sense wouldn't go into hospitality. And it was kind of said in jest, and he's a friend of mine, and I— but I do understand what he's saying. You know, when you look at— if you looked at it purely from an investment point of view, A lot of people say no thanks, they pass, and they invest in something else with a safer rate of return, a higher rate of return, not as risky. We are an industry of really passionate people that do it because we love it, and ultimately do it because everybody else loves it as well. Imagine your life without hospitality businesses. Like, we literally punctuate our lives with these businesses. We go out on birthdays, we go out by ourselves to commiserate, we go out to celebrate anything, and the world would be a much more miserable place without these businesses. So I totally get why somebody would want to do it. I'm not the person that's going to sit there and go, don't bother, babe, which a lot of people would— a lot of jaded business owners now would say to you. But I would say you need to understand your business inside out, whether that is working for somebody else in the first instance, or educating yourself, take courses, read books, things like that. And yeah, know your numbers. That's one that I learned, thankfully, maybe just in the nick of time. But it's something I've really had to like beat into myself. It hasn't come naturally to me and doesn't come naturally to a lot of other people in this industry.

Because you can get easily distracted with the busy work of running and owning a cafe.

The more fun work as well, let's face it. It's way more fun. I would rather sit and have awkward, like, challenging HR conversations with people all day than sit and look at my P&L that closely. But like I said, you can't afford not to.

You mentioned HR, and I'm thinking, especially as you said, there's quite a high turnaround in the industry. You've obviously had to let people go. How do you know when it's time to do that?

If you've got a really strong culture, it becomes really obvious really quickly because they stand out. They're the sore thumb. If you've got a group of people who are yes people, they're gonna try their best, they're gonna try something new, they've got a great attitude to work. Sure, everyone has bad days, but then they pick up their friends around them when they are having a bad day. Then if someone comes in and doesn't fit that culture, doesn't understand those values, it becomes obvious really quickly. And there is a skill to recognizing it early definitely. And of course I've made mistakes. We all, you know, we all have. I've definitely held on to people for too long. I believe I can change people. I, that's my biggest flaw. I believe that if I give people enough chances and I level with them and look them in the eye and talk to them enough times, they'll get it. And I've definitely been guilty of not pulling the plug soon enough. But actually what I'm training people to do now is because something else that the government are probably going to do is change employment laws. In the UK whereby people have employment rights, full employment rights, much, much sooner, which means that—

Currently they are after 2 years.

Correct. But we will have to get much, much better at recognizing this within a probation period and saying, I'm sorry, you've not passed your probation period, which I think is a very fair conversation to have because you're paying for them for that time. They get paid for their, their service, but ultimately you don't fit in. This isn't the right place for you. And not being afraid of having that conversation.

And if you would be looking back at 8 years ago, at the Lydia who just finished 7 years working in cafes and hospitality and had this itch to start her own business, what would you advise yourself? What would you say to your younger self?

It's difficult because I think that every single challenge that came along has turned me into the person that I am now. It's difficult to really want to give her any, like, really profound advice because she's gonna get there, do you know what I mean? I really do believe that, and I know that. But if it were anything, it would be something around the balance of managing the control freak but not stepping too far back, because I've done both of those things the wrong way both ways. In the first instance, I've I've micromanaged, I've hired managers, but only managers in name because I still jumped in and did all the HR and did all of the management. But then also I've knee-jerk gone back and stepped too far out of the business and watched certain standards slip. Because like I said, if you're not there to set the standard, explain the standard, people can try their best, but ultimately they're not quite gonna get there. Something about balance in the middle there about It's about having the processes in place from day one to set the expectation of here's your training, here's the standard, and here's how I'm expecting you to uphold it.

Speaking about balance, when you manage 3 locations, dozens of staff, how do you keep grounded and motivated? What are your daily or weekly habits and routines that keep you going, especially when things can sometimes feel overwhelming?

Sure. So this is a new one for me and something I'm still working on, but I have found that I'm much better business owner now I have some of these processes in place. So daily, daily habits. Every morning I get up and there is some meditation, there is some journaling where I sit and sort of check in with myself and how I'm feeling mentally, physically. And then I go off and I train at the gym. I'm actually injured at the moment, so I'm doing a bit less of that, which is a bit of a bummer. And then I get on with my work day. Then there's like a hard off, and this is the one that's really brand new, is pre-eating dinner, whatever time that might be, I go back to my journal and I do like a, a thought dump where I'm just like literally dumping out everything that happened that day, what bothered me, what could potentially still be bothering me later on. I've also got my list going on next to me at the same time about things I can hand over to the next day. And it has to be paper, by the way, you can't type this. So there's something about that.

Voice notes, maybe?

I don't know. I've never tried it. Maybe. But for me, there's just something magical about the pen to paper, getting it all out, which means that I genuinely can switch off. Or if I find myself switching back on, I can be like, no, no, you wrote it down. Don't worry. You're not going to forget. You know, it's there. And you know that you can be efficient because look at these days and days and days worth of evidence that you've done it and you've done the thing. You don't need to sit up at night worrying about this. So those are like the daily habits. And I'm really strict with them on days where you don't feel like doing it. They're the most important days to do it because if I'm feeling low energy, unmotivated, which really does happen, it really does. And in this, I'm not even ashamed to admit that in this climate and where we're at right now, it happens a lot. I'm having to really like self-talk and motivate myself a lot. But those are the days where it's really important to visit those habits and make sure that you are mentally checking in and looking after yourself. For me, that's physically going to the gym as well and having that outlet. Because all of that helps me sleep better. And all of that helps me be a better person, a better business owner, a better friend, a better wife. It's all-encompassing.

While we're into this introspective point, something that I'd like to ask at the end of the episodes for Millennial Busters, especially because I know it from my own experience as well. There's, um, no success without sacrifice. And you could get to a point in your business where you are now, where you can impose some sort of balance. But I'm wondering, Lydia, what are the biggest sacrifices you had to make to be where you are today, especially in last 8 years since you've been growing the business?

I disappoint you here because I think that because I knew what I wanted, I really wanted to run this business and I really wanted to have multiple sites. I guess you could say that the sacrifices are that time, probably more than anything, because there are definitely are periods of time where you go a really long time without time off, without meaningful time off anyway, or go, yeah, longer times without traveling and without doing those those, those things, but it's short-lived because, you know, like I said, if you've got the right processes and the right people in place, you know that it's like, okay, it's a month, it's 2 months of graft, and then I can have some me time, have some downtime. But I've always been really strict about not missing the really important things like family time, events, events, things like that. I couldn't say to you I missed my best friend's wedding or something like that. I just, I wouldn't let it happen, but also the team around me wouldn't have let it happen. We have this really strong culture of, you've got that thing next weekend, so no matter what happens, we're getting you there. Someone calls in sick, I'm covering it, don't worry. Stuff like that. And we do have this really genuine love for each other that respects those boundaries, I think. But ultimately, I don't really think of things in terms of sacrifice because this is what I wanted. This is, this is the task that I set myself and the career that I chose. So I don't think of it as, well, what could I have had, or what could I have been doing? Because I'm all in for this.

Wrapping up, we know you're looking for your fourth location now. What would be the ideal size for your business? How many locations would you think, okay, this is a nice number that I can settle in now and optimise and grow and maximise revenue from? Or there's no end to your vision?

I don't think there's no end, but I think that the current climate has changed it for sure.

Yeah.

I think when I first started, I was like 4 or 5, because looking at that from a revenue place and from like a profit model, that's like the sweet spot for me. But actually I think that our expectations of return on, like in terms of profit has to change. So I don't know right now. I think the answer is I'm kind of remodeling the whole model and looking at the vision and thinking what that might look like in the not so near future.

So you're not going to put a number on it.

No, I'm not.

That's fair, but I'm sure we'll come back to it. Thank you so much for joining me today, Lydia, for sharing your wisdom and learning so far, and I can't wait to see what you're going to be doing next.

Thank you so much for having me. This has been great. Loved it.

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