How I made £47m selling buns to KFC
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Asif Rangoonwala says he learned everything he knew about business from his father, a man who’d been a close friend of some of Pakistan’s most important business and political families.
But in 1996 at the age of 40, having worked across his father’s sprawling empire for more than 25 years, he was ready to go it alone – particularly as it looked like there wouldn’t be much of a business left to inherit.
“As my dad got older, he started selling off all his assets. He wanted control, and the easiest thing to control is cash. You don’t need a bank manager, you don’t need anyone if you’ve got cash.”
Having worked as a money manager, Rangoonwala was all set to go into the financial boutiques market, when he got a call from an ex-associate who’d worked at Northern Foods. They had previously discussed a plan to set up a bun-making firm to capitalise on the inefficiencies in the bakery market. Searching for a new challenge, Rangoonwala said: “pull it off the shelf, I want to do it”.
There were two hamburger bun firms in the UK at the time, and they were pulling a fast one over the market – “it was basically a cartel”. They were run from inefficient, ancient factories, incapable of ramping up production. Rangoonwala thought there was plenty of room for improvement. He had a sizeable £232,000 to his name – but Eurobuns needed at least £3m in start-up funding. Four friends put down £200,000 each, while his Pakistani connections helped him raise the rest. Bank Albaraka loaned him £2.4m at 16% over 18 months.
It seemed a reckless deal, but “I felt I had nothing to lose”, says Rangoonwala. He bought a new-build factory in Milton Keynes, which was owned by a developer on the verge of bankruptcy. “The guy was desperate. The rent was £222,000, he gave it to me for £160,000.”
The plant came on line in April 1997 and by August Rangoonwala was making his first sale, after being introduced to Wimpy chief executive Max Woolfenden. “I said, ‘Max, you show me a picture and you give me the specs. If I can make that perfect for you, will you buy it?’ He said, ‘Asif, it’s very rare I meet people like you. If you are that sure you can make what I want, I’ll buy it off you’.”
First-year sales were £1m, followed by £3m in the second as more and more customers, including KFC, bought from him. “Today, we are sitting on about £47m or £48m,” he says. “The key is that most of the plants out there are knackered. They’ve been sweated and sweated, so I think there is great room for consolidation. You could take this business and bring it to £400m turnover in two years by making acquisitions.”
And he is also following in his father’s empire-building footsteps. Other ventures he’s involved in include a property business, Swanbourne, which invests in student accommodation, and P1 (Formula One with boats). “I work 14 hours a day, Saturday and Sunday. I’ve become like my dad. I don’t have holidays. But you only work at things you don’t like. I love what I do. So I never work. It’s like going out with a girl, if you don’t like her, it’s hard work.”
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