Ganan Kanagathurai

Ganan Kanagathurai tells Mel Flaherty how he hopes to lead Itsu to fulfil its potential.

“Technology is the enabler, not the solution, the solution is fundamental changes to the operating model, supported by technology that allow the pivot to fully-customised food, all day every day.”

Healthy ambition

Itsu’s plans to grow by 30 sites a year for the next five years would sound bullish at the best of times, let alone when all eyes are watching how the hospitality industry can come out of perhaps the most challenging period in its history.

Ganan Kanagathurai, chief executive of the 75-strong chain of Asian-inspired fresh food eateries, is in a positive and philosophical frame of mind about the growth strategy and his part in it.

“Having just turned 40, I hope I am moving into the second half of my life. As I do, I feel very content with where I am, I never thought I would be at the helm of a £150m business with such global potential. Itsu is at the intersection of everything that is good in food right now and with the strength of a 20-year brand behind us, the future is as exciting as we want to make it.

“The next part of my career is all about testing myself, I just want to know how good this business, and I, can really be.”

Kanagathurai absolutely does not come across as lacking in self-confidence when he says this, nor does he sound falsely humble. He just wears his heart on his sleeve and tells it as he sees it. And he has every faith in the business, founded and owned by Pret A Manger founder Julian Metcalfe. He is also highly and infectiously enthused about its future development.

Expansion trail

The stated aim is to grow the system-wide sales to £500m in the next five years by opening around ten company-owned sites a year, mainly larger stores with more seating across pockets of UK cities and regional towns, starting with the more affluent market towns. Regional units are the ones that have recovered quickest from the Covid crisis, not being so reliant on office workers and having a better balance between eat-in and takeaway business, Kanagathurai explains. In addition, they attract more families and there is a longer customer dwell time, which vastly increases the extension of the day part into the early evening and beyond. Having said all that, he says there are still further opportunities in Itsu’s London heartland. Itsu’s own new stores will be complemented by a further 20 franchised stores a year – the first UK franchises open later this year in Leicester and Reading and there are plans for an opening in Brussels Airport and Switzerland. Alongside all this will be continued growth in its already blooming grocery business which sells itsu branded products at all of the major supermarket chains and internet food retailers. The grocery business is arguably the most exciting part of the itsu proposition. Born as the Asian sourcing arm of the restaurants, Metcalfe and the grocery team plan to grow this side of the business to £100m of sales across multiple international territories.

Kanagathurai firmly believes Itsu can achieve these ambitions because, he says, the brand sits at the centre of a Venn diagram of great-tasting, affordable, and nutritious food – 50% of the dishes come in at under 500 calories, a third are plant-based and the vast majority are priced under £7.

 

Food revolution

Kanagathurai says these attributes are perfectly aligned with emerging and future consumer trends which the company says are leading to the first fast food revolution, potentially worldwide, since the 1950s. Naturally, he intends itsu to be at the forefront of this revolution. He says the combination of the strong senior team (which alongside Metcalfe’s pedigree boasts former Pret CEO Clive Schlee as chairman) and the fact that it is now well-capitalised with the introduction of experienced new investors, Bridgepoint, gives it more than a passing shot.

itsu has come a long way from its beginnings as a sushi-led business; hot food sales have grown from 20% to 40% in recent years and the plan is to grow the split to 50:50 as, Kanagathurai says, hot food creates more of an emotional connection with customers. He feels it is a travesty that the ability to eat healthily has traditionally been for a privileged few, due to the high prices charged, and believes this will eventually change. Chatting to Kanagathurai, it is clear that he feels strongly about inequality of any kind – he is committed to promoting diversity in its broadest sense within his own business:

“In hospitality and retail there is a lot of diversity on the shopfloor, but this is not reflected at senior management nor at board levels.

“At itsu we are far from perfect, there is a hell of a lot to do, but we are aware of the issues and open to solving it, that is the first step.”

Kanagathurai supports this philosophy in his personal life too – he chairs the board of Rifco Theatre Company, which was set up to develop, produce and tour accessible productions that reflect contemporary British Asian experiences in an industry where that voice is under-represented. In the little spare time that he has left he also supports a non-for-profit called the Foundation of Goodness, which aims to support and empower rural communities in Sri Lanka, his country of origin, after the devastation of Asia’s longest running Civil War and the Tsunami of 2004.

itsu is using technology to help with the price versus health imbalance through the use of sushi robots – these are reducing labour costs and time needed to prepare food. While stores were closed during the pandemic, the company ended up using Company Voluntary Arrangements to help it manage rental obligations and other liabilities whilst closed, but it also had the time to expedite investments in technological developments. It has introduced touchscreen ordering to a handful of sites with the intention to roll it out to 55 more by the end of Q1 next year. In addition, the Itsu app has been improved with ‘build your own’ functionality, which allows customers to customise their food on different axes – flavour, appetite, allergens and health.

“The term ‘healthy’ means different things to different people – for some it will be high protein, for others less carbs or sugar, taking out allergens and so on. Customer customisation is where the food industry is going,” Kanagathurai explains. “The pizza sector has been doing it for ages, so it is not new, but it has been hard for the rest to adapt their operational models to deliver the proposition.

“Technology is the enabler, not the solution, the solution is fundamental changes to the operating model, supported by technology that allow the pivot to fully-customised food, all day every day.”

He adds that this approach also has huge benefits for the environment as it helps minimise food waste.

Kanagathurai reflects that he has a track record for being in industries just as they are being disrupted by new technology.

Disruptive influences

This trend started when he was in the television industry. Having given up on his childhood dream of becoming a professional cricketer, Kanagathurai, threw himself into his studies. After completing his degree in Economics and Statistics at University College London, he “followed the money” into banking, which he soon discovered he hated, so much so that he left two months before his first bonus. He then joined Ernst & Young where his work on strategy and M&A led to a secondment with one of his clients – The Walt Disney Company in Los Angeles.

“Looking back, I was born and raised in London, an only child of a single parent. Moving overseas allowed me to reinvent myself – it was the making of me,” he says.

The originally planned 18-month jaunt turned into six years in the finance and strategy departments of the Disney corporate office and then the television arm of ABC Studios, working on syndication and licensing. The experience coincided with the advent of internet streaming.

The combination of the desire to return home and the realisation that as a non-creative he could only get so far in television led Kanagathurai back to the UK. He took time out to do an MBA and then joined Tesco. He worked in both the food and non-food parts of the business, reimagining what was then Tesco Direct and helping to develop the proposition for Tesco.com internationally. This was just when retail was going through its big online revolution and the grocery giant was trying to create scale online with its food proposition and compete with Amazon in non-food. It was his move to the corporate venturing side of the business that opened his eyes to a working dynamic outside of the corporate environment: “I never really felt like I fitted into the corporate mould, although having done it for 15 years I think I always knew it. I knew that I had to get out at some stage if I was going to try and achieve whatever ‘potential’ I had left in me.”

While the marriage between David and Goliath in this way proved unsuccessful, Kanagathurai soaked up the learning opportunities and after 6 years at Tesco realised that working towards becoming a “big cog in a big machine” was not going to do it for him.

“I was always advised that working in big companies allows you to make mistakes on someone else’s time and money,” he ruminates. “I began to realise that if you really want to affect positive change in your economies and your communities that becoming a big cog in a small machine can actually be more effective, as long as you pick the right machine.”

He left to do some management consultancy work in San Francisco for a year before he was approached by itsu. He initially joined as Chief Financial Officer but over the years has assumed more and more responsibility for the business, continuing to work alongside Metcalfe himself.

He believes his skills complement Metcalfe’s quite nicely, even though he admits their differences often bring robust debate and healthy challenges. He says this gives itsu the “best of both worlds” and puts the business on a good footing as it moves from its current position as “a highly entrepreneurial adolescent” to the next stage of its life cycle. Much like Kanagathurai himself.