Brake Bros plc
Brake Bros plc
Brake Bros plc
Sales: $1.69 billion (2000)
Stock Exchanges: London
Ticker Symbol: BKB
NAIC: 422420 Packaged Frozen Food Wholesalers
Brake Bros plc is one of Britain’s leading food suppliers to caterers in the United Kingdom and France, with designs on future European expansion. Members of the founding Brake family continue to own a major stake in the business, approximately 43 percent. The company, selling most of its products under its own label, operates through eight divisions, created in large part by an aggressive acquisition program that followed the company’s initial public offering in 1986. Brake Bros Foodservice, the core of the business, is the top provider of frozen foods to U.K. caterers, offering more than 1,000 products. Larderfresh supplies fine foods, including fresh fish and seafood, to chefs. Country Choice supplies frozen products to bakers. Twin Chef prepares specialty dishes for the catering industry and also provides bacon and cooked hams, frozen vegetables, and desserts. Offering a variety of chilled and frozen foods, Puritan Maid targets major catering operations with multiple locations that require consistent quality. Watson & Philip is a wholesaler of chilled grocery products to chefs and caterers and also distributes non-food and cleaning products. With its own fish processing and smoking capabilities, M&J Seafood is a supplier of high quality fish and seafood to caterers. Brake France offers chilled and frozen products that are appropriate to French caterers.
The Start of a Brotherly Business: 1958
The three Brake brothers—William, Frank, and Peter—were brought up and trained in the catering industry. In 1958, they struck out on their own, starting a business to supply poultry to caterers, at first working out of a pub kitchen. Taking advantage of their contacts with caterers they expanded their business in 1963 by beginning to distribute frozen foods, which until then had not been generally well regarded by the foodservice industry. By bringing an improved quality to frozen foods, Brake Bros was instrumental in raising overall standards in the United Kingdom. The company again showed forward thinking in 1969 when it opened a cooked food factory to prepare frozen meals, positioning Brake Bros to take advantage of a growing pub food market. Frozen foods proved to be so successful that the company eliminated its original poultry processing business in 1974. Over the next dozen years Brake Bros continued to grow its business, in large part through a number of acquisitions.
By 1986, Brake Bros operated 16 cold storage depots located throughout the United Kingdom in order to service more than 35,000 customers, which included pubs, restaurants, hotels, hospitals, schools, and factories. In the years 1984 and 1985, the company increased its number of depots from eight to 15. As a result, revenues and pretax profits soared, more than doubling from 1982 to 1986. To fuel continued growth, in particular the opening of more depots, Brake Bros elected to make an initial public offering of stock in October 1986. Each brother retained a 25 percent stake, while the remaining 25 percent was sold at 125 pence a share. Each brother would realize about £3 million, and after expenses the company netted approximately £4.3 million. In an interview with the trade publication Quick Frozen Foods International, Frank Brake explained, “Although the flotation gave us the financing to expand more quickly, we still applied the same financial and management controls right across the business and ensured that borrowing was kept to a minimum. The stability this gave the company allowed our planned progression, first to a national frozen food distributor and then into chilled and multi-temperature, all within foodservice.”
Brake Bros took a major step in national expansion in 1987 when it established an operation in Scotland. Over the next few years, the company also grew externally through a series of acquisitions, including S.H. Wickett & Sons in 1989, Elmdale Foods in 1990, and Midfish and Everfresh Frozen Foods in 1991. The company also acquired London Larder and created a fine foods division, Larderfresh, moving beyond frozen foods to chilled food distribution in order to service the quality hotel and restaurant market, which chose fresh foods over frozen. Earnings were depressed somewhat in 1991, due to the unexpected expense of establishing the fine food business, as well as a fire that destroyed a cold storage facility in West Yorkshire. Nevertheless, revenues increased by 14 percent over the previous year, reaching £223 million.
France Expansion: 1992
Brake Bros looked to grow overseas and through niche U.K. markets. It turned to France in 1992, acquiring frozen food suppliers Anjou Surgelation and Cogehalles to form the basis of its Brake France division, to which it added further French purchases. In May 1993, Brake Bros completed its largest acquisition to date when it bought Country Choice Foods for £14 million in stock, a move that allowed the company to enter a new market sector, supplying frozen bakery products. Country Choice was a well established and profitable national distributor with eight depots. While this acquisition immediately added to Brake Bros’ earnings, the new fine foods business lost money as it established itself. Moreover, the U.K. catering market suffered through a period of stagnant growth. The French operation, in the meantime, appeared at least able to reach a breakeven level. Despite these difficulties, Brake Bros increased revenues to almost £354 million in 1993, and pretax profits exceeded £19 million.
Larderfresh and Brake France continued to produce a drag on earnings in 1994, although management remained committed to both businesses, believing they would be instrumental to the future growth of Brake Bros. These difficulties, however, were more than offset by the improving U.K. catering market that benefited Country Choice and the company’s frozen food business overall. The result was a significant increase in sales, which topped £400 million, and pretax profits, which improved to £23.5 million. Brake Bros also bolstered its fresh and frozen fish business in 1994 by acquiring Jesse Robinson, a Nottingham distributor.
In 1995, Larderfresh increased its sales by nearly 70 percent, thereby dramatically cutting into its losses. Brake French, on the other hand, posted a modest profit, helped in large measure by the mid-year acquisition of Frigosud SA. Overall, Brake Bros improved its earnings by 15 percent, a pace the company had maintained since going public ten years earlier. A November 1995 acquisition, however, would hamper that impressive string of results. Brake Bros acquired Puritan Maid and its multi-temperature food distribution business from the Forte hotel chain at a cost of £7.4 million. It promised to be a pivotal addition to Brake Bros, which would now be able to tap into the growing market of large catering chains that preferred a single vendor for foods at all temperatures: ambient, chilled, and frozen. The company also signed a valuable three-year deal to supply Forte hotels and restaurants. Taking over Puritan Maid, however, proved to be problematic. To avoid relying on Forte, the company took on too many additional customers, but business quickly outstripped capacity, leading to many dissatisfied customers. Additional staff had to be hired and facilities contracted, which resulted in a spike in operational costs that could not be offset by contracted prices with customers. At one point, Puritan Maid was losing £1 million each month. Although in 1996 the company continued to improve on its earnings over the previous year, its impressive decade-long growth rate was curtailed, and investors responded by bidding down the company’s stock. Larderfresh finally turned the corner, and after five years the French operations also appeared ready to make significant contributions. Brake Bros would have to depend on both divisions coming through in order to offset Puritan Maid, which was likely to require a lengthy period of time before it would be able to turn around.
Brake Family Control Easing in 1997
The Puritan Maid difficulties led CEO Frank Brake to announce that the company had to abandon a £20 million multi-temperature national food distribution center that had been in the works. Cost-cutting measures were implemented, including the elimination of 200 jobs. Moreover, the Forte distribution deal was also renegotiated and customers unwilling to agree to new contract terms were terminated. It was also becoming clear that the company was facing a transition period in which the founding fathers of the business would have to turn over operational control to executives outside the Brake family. William Brake, after 40 years with the company, stepped down as executive chairman. Frank Brake, at 63 years old, then assumed the position, and 52-year-old Ian Player, chief executive of the seafood division at Albert Fisher, was hired as the new group chief executive, taking over on July 1, 1997. In addition, a new finance director was hired. Despite problems in 1997, Brake Bros was still able to bolster its dessert business by acquiring Dairyfresh Desserts, supplier of spongecakes and puddings.
Our shared objective is to be the leading food service supplier to the catering industry, providing profit opportunities for our customers, developing employees to their full potential, and generating profit for re-investment in the business to the benefit of our shareholders, customers, and employees.
Under Player’s leadership, Brake Bros made inroads in restoring Puritan Maid to health, cutting losses significantly. In October 1998, the company acquired the food distribution business of Watson & Philip to combine with Puritan Maid in order to broaden offerings to major catering clients, in particular room temperature products such as pastas and tea, as well as non-food products. Brake Bros, however, suffered some setbacks in 1998. Brake French again lost money after finally breaking even, and U.K. sales were depressed as people chose to eat out less, a change attributed to fears about the economy as well as the month-long World Cup soccer tournament that many stayed home to watch on television. Brake Bros was further troubled by the installation of a new IT system that resulted in £3 million in unexpected costs. Nevertheless, the company grew revenues to nearly £760 million in 1998 and posted a pretax profit of more than £30 million.
Brake Bros continued to address its problems with Puritan Maid and Brake France in 1999, as revenues showed dramatic improvement, increasing to £967 million, while pretax profits topped $36.1 million. The company was now positioned to renew its efforts at expansion, earmarking £100 million for acquisitions, with an emphasis on improving its fresh fish business. In March 2000, Brake Bros acquired M&J Seafoods, the U.K.’s largest independent distributor of fish and seafood, at a cost of £44 million. Already strong in the pub business, Brake Bros now gained an increased presence with some major restaurant groups through the M&J addition, as well as a large airline catering business. The M&J operation included ten depots, two processing plants, and a fish-smoking facility. Brake Bros made another major acquisition in July 2000, picking up the 100-year-old family-run Cearns & Brown, a major U.K. food wholesaler, at a cost of £23.7 million in cash and the assumption of £8.3 million in debt. While traditionally selling such groceries as pasta and canned food, in the previous ten years Cearns & Brown had branched into chilled and frozen foods. After opening a major London depot, however, the company began to struggle. For Brake Bros the acquisition was a good fit on a number of levels. Not only did Cearns & Brown add 12 more depots spread across the United Kingdom, its business complemented the earlier addition of Watson & Philip, the two having been active competitors. By merging Cearns & Brown into Watson and Philip, Brake Bros gained both sets of customers. Moreover, Cearns & Brown’s strong position in ambient products helped moved Brake Bros closer to achieving its goal of attaining the same kind of market leadership it held in frozen foods with ambient and chilled foods. The company also bolstered its position in France by acquiring three frozen and chilled food companies in southeast France at a cost of £16 million. Then in May 2001, Brake Bros paid £17 million to acquire Szymczak Nadreau SA and Valette SA, in the process gaining a controlling stake in Carigel S.A., a major French supplier of frozen and chilled products to caterers. Because of these additions, Brake France now covered 65 percent of the French catering market, making it the country’s second largest chilled and frozen food distributor.
As a result of 18 months of aggressive expansion, Brake Bros saw its earnings fall off in 2000, but once the company fully digested its new holdings it appeared well positioned to continue its steady rate of growth. Major opportunities in the United Kingdom were limited, however, with consolidation of the larger players all but completed and smaller, family-owned businesses less likely to come up for sale. Brake Bros began to look to Continental Europe, hoping to take advantage of a strong base in France to gain inroads in new markets. With major countries including Germany, Italy, and Spain presenting few ready opportunities, Brake Bros considered establishing a presence in the Benelux countries, either through partnerships or outright acquisitions. What was not in question, however, was the desire of the company, even with decreasing participation of the founding Brake brothers, to continue its efforts to keep growing even larger.
Brake Bros Foodservice; Larderfresh; Country Choice; Twin Chef Foods; Puritan Maid; Watson & Philip; M&J Seafoods; Brake France.
Booker Cash and Carry; Diageo plc; Hillsdown Holdings, PLC; Kraft Foods, Inc.; Northern Foods PLC; Perkins Foods; Unilever; Uniq plc.
- Brothers William, Frank, and Peter Brake establish the company, supplying poultry to caterers.
- The company begins to distribute frozen foods.
- The company opens first cooked food factory.
- The company abandons the poultry business in favor of frozen foods.
- The company goes public.
- Brake Bros enters the French market.
- Puritan Maid is acquired.
- M&J Seafoods is acquired.
Abrahams, Ray, “Frank Brake Celebrates Frozen Foods As British FF Federation Turns 50,” Quick Frozen Foods International, July 1998, p. 114.
Blackwell, David, “Puritan Maid Unsettles Brake Bros,” Financial Times, March 27, 1997, p. 32.
Harvey, Amanda, “Brake Bros Adds Foods Wholesaler Cearns & Brown to Its Shopping Cart,” Scotsman, July 15, 2000.
Kemp, Graham, “Another Acquisition by Brake Bros. Turns the Focus on to UK Merger Scene,” Quick Frozen Foods International, October 1, 1993, p. 72.
Milton, Catherine, “Expansion Costs Hold Back Brake,” Financial Times, September 22, 1993, p. 31.
Smith, Alison, “Brake Bros Upbeat on Year Despite Drop in Profits,” Financial Times, September 10, 2001.
Tomkins, Richard, “Brake Brother’s Market Debut,” Financial Times, October 31, 1986, p. 26.
Wray, Richard, “Brake Bros’ Player Says Looking at Expansion into Benelux Countries, AFP-Extel News, March 24, 1999.