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Grocery Guru Ep25: Issa Brothers Buy Leon & Cafe Nero to Grab the Electric Car Market For EG
Join Andrew Grant and Darren A. Smith in the twenty-fifth episode of the Grocery Guru discussing the Issa Brothers buying Leon and Cafe Nero to grab the electric car market.
You Can Read the Full Issa Brothers Episode Transcript Below:
Darren A. Smith:
Well, hello and welcome to episode 25 of the Grocery Guru with Andrew Grant. Andrew, how are you?
Andrew Grant:
Morning Darren. Very good. I’m very good, thank you very much.
Darren A. Smith:
We’ve hit a milestone. We’re at 25 episodes of sharing your guru-ness, if that’s a word?
Andrew Grant:
Wow. Wow.
Darren A. Smith:
All right. So what’s on your mind this week?
Andrew Grant:
Well, I guess the retail news that stood out to me alongside the European failed Super League was the Issa brothers buying Leon, the semi-fast food chain and seem to be closing in Caffe Nero.
Darren A. Smith:
Right. Oh, okay.
Andrew Grant:
And this idea of creating, if you like, super petrol forecourts. Posh petrol forecourts. Because I don’t know what your experience of filling up at one of these forecourts is? There’s either a very nice Tesco Express or Sainsbury’s Local, but there’s often a pretty grubby Gregg’s or Subway or some unknown chain. And it’s all a little bit ugh.
Darren A. Smith:
Tell us, the brothers, what did they recently buy?
Andrew Grant:
Well, they built up Euro Garages from nothing, into, I think, it’s certainly Europe’s largest chain of forecourts, top of my head, 1,500 forecourts.
Darren A. Smith:
Right. Okay. Big.
Andrew Grant:
And they develop them as these mini shopping hubs. But I think now, they bought Aster. They can obviously use Asda’s free holder stake. Because most of Asda’s estate is freehold. So they can sale and lease back. Classic private equity stuff. Sale and lease back Asda’s estate to them. Give them a whole load of money to spend on buying. A hundred million for Leon.
Darren A. Smith:
Wow. Okay.
Andrew Grant:
And then put these fancy forecourts together. But I don’t know about you, but you pull up to a petrol station and there’s a forecourt shop there. A nice one. Don’t you feel guilty about browsing down the shelves while there’s 1,700 people waiting to fill up and you’re blocking the pump?
Darren A. Smith:
It is an odd one, but I’m not sure if it’s a generational thing. Certainly 10, 20 years ago, when I started driving, you fill up at the pump, you pay, you go. Now I fill up at a pump and I’m in two minds. If I’m the one browsing, I can leave my car there, it’s fine. If I’m the one waiting and there’s a guy doing two weeks shop and he’s about 25 minutes, I wants to slap him when he comes out.
Andrew Grant:
Yeah, exactly. As I said earlier, Leon is not fast food, it’s semi-fast food.
Darren A. Smith:
Yeah. Yeah.
Andrew Grant:
You don’t pick up a burger or a salad or that. They make it there and then so it’s maybe a five or 10 minute wait.
Darren A. Smith:
Those people who haven’t experienced a Leon, because there aren’t that many around, what is a Leon?
Andrew Grant:
It’s high quality semi-fast food. It is like a Pret, but not sandwich based.
Darren A. Smith:
Yeah. Okay.
Andrew Grant:
It’s definitely not your Subway or your Gregg’s.
Darren A. Smith:
Yeah.
Andrew Grant:
Which is literally grab and go a hot sausage roll or a six inch sub with whatever in it. You talked about a generational thing a second ago. I think they have been… It suddenly hit me and you probably won’t get it because you’re in the same situation as me. I think they’ve hit on something absolutely that’s going to be jaw-droppingly successful.
Darren A. Smith:
Okay. Okay. So we’re talking about the brothers. Issa brothers.
Andrew Grant:
Yeah. About them investing in… Because why would you invest in a forecourt with these super posh chains where you want to linger? And you’re just going to have a whole lot of frustrated motorists sitting at the pumps going, “Why is that bugger ordering a cafe latte and then going over and getting a burger?”
Darren A. Smith:
All right. So I’m going to make a leap into electric vehicles. Is that where you’re going.
Andrew Grant:
Exactly.
Darren A. Smith:
Ah, okay.
Andrew Grant:
Yeah. Think about the future we’re all going to have to get used to. If we’re traveling on holiday or business, we’re all going to have to get used to stopping for at least 20 minutes, maybe 40 minutes to put some electric juice in our electric cars. So it’s a work of brilliance.
Darren A. Smith:
Yeah, it is. It is, because-
Andrew Grant:
As those petrol stations turn electric, you’ll turn up, you’ll plug your car in, you’ve then got 40 minutes to kill. You will want some quality food, a quality beverage. Get yourself into this zone of having 40 minute breaks in a journey when you’re driving to Scotland. So I think, five years time, work of genius.
Darren A. Smith:
That’s very true because BP, I think it was four years ago, bought Chargemaster, the largest charging company in the UK. So of course this electric thing’s moving on quicker and quicker and our journey patterns will have to change to, we’re going to have to stop, charge, get something to eat and then keep going. You’re absolutely right. We see the Tesla charges at the service stations already.
Andrew Grant:
Yeah, yeah. But as I said, at the moment, it’s a very small minority of people and the people that are buying electric cars are those people that tend to do urban journeys. But 2030, there will be no more new petrol or diesel cars available. And the tax, the tax regime will just make them unaffordable. So if you’re a national account manager, spend a lot of the time traditionally on the road, you’re going to have an electric car. The tax benefits already outweigh petrol or diesel. If you’re a home counties based account manager, you’ve got to go and visit Asda every week or so, you’re going to have to get used to stopping either on the way there or the way back for a 20 minute charge. So why not have some decent quality food at an EG forecourt? Yeah. I think that the Issa brothers have been incredibly foresightful.
Darren A. Smith:
And what about any impacts [inaudible 00:06:15] leap with Asda?
Andrew Grant:
Well, what they get with that is they get Asda’s massive purchasing power on the food and the beverage and obviously the forecourt shops can have Asda takeaway, Asda groceries, food. Maybe the extend click and collect. You’re in your Tesla, it says you’ve got 10 miles before you need to recharge. You place your grocery order, your car’s on charge, you go for a Caffe Nero or a Leon and then the nice Asda people fill your boot up with the groceries you’ve ordered.
Darren A. Smith:
Wow. I like it. That’s a hell of a model.
Andrew Grant:
There we go. That’s a bit of a look into the future today.
Darren A. Smith:
Well, let’s see if you’re right. We’ll come back to that in a few months. Andrew, thank you for your guru-ness.
Andrew Grant:
No problem.
Darren A. Smith:
I might have to trademark that, and we’ll see you next week.
Andrew Grant:
Take care.
Darren A. Smith:
Thank you. Bye. Bye.
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