Interview: Niall MacArthur, founder of EAT

EXPANDING in Scotland should be good for business, but for EAT founder Niall MacArthur it is also something of a homecoming.

Raised in Perthshire, where his late father Ian was Conservative MP for Perth, MacArthur finished school at 17 and travelled in France for a year before taking his place to read English literature at Cambridge. He didn’t realise it at the time, but he was leaving Scotland for good.

Now aged 53, MacArthur has travelled a lengthy and unlikely road to his current position as co-owner of EAT, an award-winning chain of fresh food shops with a heavy presence in London but as yet sparse representation north of the Border.

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That is set to change, however, with new financial backers funding EAT’s aggressive expansion throughout the UK.

MacArthur prides his business on having “not gone corporate” even though it now trades from some 120 shops, including two newly-opened sites in Glasgow. Sitting in the upstairs corner window of EAT, overlooking the bustling Gordon Street corridor to Glasgow Central, MacArthur chats about his past and the future for his family-run company.

“We want these to bed in first, but the signs so far are quite good,” he says, referring to the outlets in Gordon and Sauchiehall streets, which began trading at the end of December.

“I think we can do about three more in Glasgow, and in Edinburgh probably another three – it’s not as big a city – and then we would want to look at Aberdeen.”

EAT is already in negotiations for what MacArthur describes as a “highly contested” site in the capital which he hopes to have up and running by September.

If all goes to plan, the addition of high street shops to established EAT outlets at Edinburgh and Glasgow airports will more than double Scottish employment to just shy of 200 people.

Total investment north of the Border will be in the region of £2 million, but forms just a fraction of the overall outlay backed by Lyceum Capital, which took a 50.5 per cent stake in EAT in March of last year.

Initial plans are to double the size of the business within three to five years, with international expansion a possibility thereafter.

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It all amounts to rather significant sums – particularly during an economic downturn – but former hedge fund manager MacArthur doesn’t flinch when faced with the figures.

Having earned extra money at university selling sheepskins door-to-door – an enterprise he first undertook successfully while in France – MacArthur finished his degree at Cambridge with the notion of going on to set up his own business.

“I was going to be Mr Sheepskin Seller, or something like that – all of my ideas revolved around door-to-door selling,” he says with a grin.

“It was all quite silly, but the thing was, I had had that taste of controlling my own destiny, which is quite an exciting thing for a young man, or at least it was for me.”

With limited funds and nothing but “half-baked ideas” on what to do next, he eventually opted for a one-year MBA course at City University Business School. Though not as well known then as in its current incarnation as Cass Business School, the institution did attract large numbers of recruiters from the City.

In what started as a bit of a joke with his friends, MacArthur applied for a series of banking jobs, and to his surprise got offers from all.

He took a post as an MBA trainee with US giant Bankers Trust, heading first to Wall Street before returning to London to take up foreign exchange trade.

“It was absolutely brutal, and as it turns out, I was actually good at it,” MacArthur recalls.

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“It didn’t matter how old you were or what your background was. It was just about what you could achieve.”

He spent the next 13 years working in various locations around the world for Bankers Trust, including one year in Los Angeles where he met Canadian wife, Faith.

He eventually climbed to the top of European treasury operations, but the senior position took him away from the challenge of having his own profit-and-loss account within the organisation.

MacArthur left the bank and took a year out to decide what to do next. During that period, he spied one of the first Starbucks outlets while on a road trip to Vancouver with his family, prompting the start of work on what would eventually become EAT.

The couple hired staff and kitted out an industrial kitchen at a cost MacArthur seems embarrassed to reveal – “it was quite a lot, it was crazy” – but were still searching for a site for their first shop before he secured a lease on London’s Villiers Street.

Venture capital group 3i invested an initial round of seed capital a year later in 1997, and a year after that, EAT was voted Sandwich Bar of the Year.

3i sold its stake to Glasgow’s Penta Capital in 2005 in a £39m refinancing, by which time the chain had grown to 45 shops. Following continued expansion, advisers were hired three years later to look at how best to take the business further forward.

The process was thwarted by the onset of the banking collapse. EAT was linked to a number of potential buyers in the intervening period – including a possible takeover by supermarket chain Waitrose – before last year’s deal with Lyceum.

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Though Lyceum now owns a slight majority of the business, MacArthur and his wife still work the long hours they did when EAT was starting up: he as managing director; she as brand director.

“We are still focused on those things that got us excited in the first place – the product, quality of service and dealing with people straight,” MacArthur says.

“It has nothing to do with the size of the company, it has to do with the culture. There is no reason for those things to change, we will just do it bigger and better.”

BACKGROUND

RAISED in Perthshire, Niall MacArthur read English literature at Cambridge and earned an MBA from City University Business School before joining Bankers Trust in the early 1980s.

He worked for the bank in several overseas locations during his career, including stints in Los Angeles, Milan, New York and Paris.

He and Faith, who MacArthur met while working in LA, were married during an overnight visit to Inveraray Castle before his transfer to Paris. They lived there for four years before Faith became pregnant with Ewen, the first of their three children.

They returned to London, where MacArthur continued to work for Bankers Trust until 1995, by which time he ran the group’s European Treasury operations. They opened their first EAT shop in London’s Villiers Street in October 1996, and have since grown the business to 120 outlets employing about 2,000 people.

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