Gerard Anderson has proved he has real staying power in Australia’s notoriously fickle hospitality industry as the co-owner of three successful bars.
Anderson owns and operates Three Below, Caboose Canteen and La Vita Buono in Melbourne alongside his brother, Michael Anderson, through their company City Square Traders. The venues now bring in $5 million a year.
Now Anderson has turned his hand to importing after discovering boutique beer Na Biretta in a bar on a trip to Rome.
His new company Urban Importers is quickly gaining traction importing cult drink brands including Gallia Pils from France and Sacred Spirits from the United Kingdom on the back of the strong Australian dollar.
How did you start in the industry?
My relatives owned a very suburban-style hotel, so I’ve always been around hospitality I guess. Then when I finished school, I went and did business management and marketing at university.
While I was studying that, I started working for a company called Marriner Theatres, which is owned by David Marriner, and I ended up managing all their venue outlets as hospitality manager.
Then in 2003 I decided that I’d been there six years, it was a good time to finish up, and the space across the road at City Square was completely vacant.
I basically put a proposal in to the landlord to open what is now Three Below.
Three Below opened in October 2004 and I opened that with my brother, Michael.
From that point on we opened Caboose Canteen, in 2006, and then La Vita Buona, in 2008.
Three Below is turning eight years old this year, which is a fairly good achievement in terms of hospitality longevity, as so many venues open and close within their third year, so it’s been good to get to that point.
When you initially opened Three Below, how did you get the funding? Was it a matter of convincing someone to give you a loan or just scraping it together?
It was very much a case of scraping it together. [My brother and I] basically used whatever savings we had at the time together, which was pretty minimal.
The landlord contributed to a large part of the fit-out, which we paid back during the first five years of the lease.
It really was a case of having to be busy from day one to make it successful.
We looked at alternatives of taking out personal loans but it was a much better, safer way to do it the way we did it.
What’s your revenue now?
For the last calendar year, City Square Traders had revenue of $5 million.
All three venues are still currently in growth, which I think has been a really pleasing aspect, and at the moment they’re growing above the consumer price index, which is a true sign that they’re heading in the right direction.
I think that’s a little bit about a willingness to read what the market’s doing, what the customers are asking for.
When you first open a venue you often have grand plans of what you want to offer, what you want to do, but you may not always get it right, and sometimes it’s hard to say, “Okay, I haven’t got it 100% right, what’s the public asking?”
You have to ask how you can best deliver that and also still stay true to your concept of the venue.
What do you think the secret is to having longevity in the hospitality industry?
When you look at other really successful venues, I think there are two types: ones that are owned by larger companies, and then owner-operator venues.
Our venues really required an owner-operator so I think that’s been part of our success.
We’ve had a small staff base and a number of our staff have worked for us for a long time.
We’ve also got a big, regular customer base and I guess Michael and I are known by those regulars as well, which contributes to it.
I think you also have to be willing to change your business a little bit and move with what trends are dictating, even if it’s just little things you might do, like upgrades to a venue to keep it evolving.
For example, in late 2010 we rebranded of all venues as they needed a spruce-up in terms of a little bit of maintenance, and a change of direction putting a lot more focus on food.
I mean, when we opened you were still allowed to smoke inside licensed venues, so it was about adapting to different licensing laws, and providing something slightly different for our regular customers.
What have been some of the challenges you have faced?
Because we are in the City Square, which is a public space, we have to negotiate our lease with the Melbourne City Council, which is quite difficult.
Especially in the last six to nine months we’ve had some major things in the City Square, such as the Occupy Melbourne protest and roadworks out the front, which have been massive challenges that have had quite big negative effects on our business.
We’ve also gone through the global financial crisis, or supposed financial crisis, and also changes to licensing laws, like the introduction of no smoking and changes to licensing fees.
People often see [running a restaurant or bar] as a really easy thing to do, and it’s really not.
It requires seven day, 24-hour attention to the venue.
If you’re going to be an owner-operator you’ve got to work out what your lifestyle choices are going to be.
If it’s going to be a five-day operation or seven-day operation or early day or late night venue, the thing is you’ve really got to work for other people in various venues and styles to really get a good grasp of the industry.
What impact did the global financial crisis have on you?
I think probably if you look at economics, normally during downturns, gambling, alcohol, and smoking are the three things that tend to stay pretty consistent.
The area that we’re in, we obviously tend to have a lot of customers who are actually in the financial industry, such as bankers and brokers, that sort of thing.
When the markets were a little bit down we might have lost some of those customers, but what we found is that customers generally still came and stayed for as long. But instead of having ten pots, they might just have one or two of a more expensive option, which is probably quite a good thing for us in the end.
It’s surprising customers didn’t stay away from the more expensive stuff?
I think partly, with the drink-driving laws, people are mindful now that you can’t drink ten pots of Carlton, so if people are only going to have one or two beers, it makes sense for them to be good beers, or two nice glasses of wine.
What about Urban Importers? How did that start?
In 2011, I was travelling through Europe and discovered Na Biretta beer in Rome, and that led to me creating Urban Importers, which I run separately to City Square Traders.
That started in October last year. It’s grown to a point where it’s a good standalone import and wholesale company.
Basically I tried Na Biretta at a little cafe in Rome called Urbana 47, which is partly where the name Urban Importers came from.
I contacted the brewery and got in touch with them on the very last day that I was in Rome.
They were lovely guys and really interested in bringing the beer into Australia.
My initial thought was really to bring it in just for our own use for City Square Traders venues, but then when it arrived in Melbourne, the initial feedback from the people who’d tried it at our venues was that there was a real market there for it.
The first shipment of two hundred and sixty-odd cases of Na Biretta beer sold out in five weeks.
So I continued that and brought in another shipment of the Na Biretta beers, then other people from Australia who knew other products from around the world contacted me and said I’d be a good fit for other products.
Now I import Na Biretta beers from Rome, Gallia Pils from France, which is the oldest brewery in Paris, some non-alcoholic products from France, and Sacred Spirits from London, which is the smallest distillery in London.
It’s been a good challenge and has really shown me a different side to hospitality.
How have you been dealing with the high Australian dollar as an importer?
It’s good at the moment for importers because obviously a lot of the commodities are based in US dollars, so the cost of the transport of your products back to Australia becomes lower.
Obviously you also buy your products at a lower cost.
The products that I import are premium, which means that they’re often priced slightly out of people’s or venues’ ideal market range.
If I can buy them at a lower price, I can sell them at a lower price without affecting the market.
So it’s making it just that little bit more accessible for people.
But that’s one of the things about importing, obviously; the dollar’s going to fluctuate backward and forward, so ideally you make the most of it when the dollar is high, as it is at the moment.
What about fixing an exchange rate?
I have spoken to a bank about those possibilities and it’s something I’m looking at. Obviously it’s not easy dealing with banks though.
How many venues are you supplying to now?
There’s about a hundred in Melbourne, and I have just started recently selling the products to Sydney, Canberra, Brisbane, and Western Australia, which is probably the next stage for business.
Obviously, it’s expanded quite quickly.
I haven’t actually sought any of the venues that are interstate, they are people who have tried the products in Melbourne and have contacted me.
The next question is how to grow the distribution and logistics part of the business and which way I go with that – whether I do it in-house or I use a logistics company.
There are not huge margins involved in the wholesaling of alcohol.
It’s really based on a volume of what you sell, that’s the way you’re going to be profitable.
But, in saying that, there’s no point selling or approaching venues that don’t suit the product, or the product doesn’t suit that venue.
I guess, at the moment, it’s very much central business district or inner-city areas.
What I’ve really found is that people are becoming more and more aware of our products, and so I’m getting a lot of enquiries from the outer suburbs, which shows that you really do need to have your products in a diverse range of areas.
There’s also the internet, as I am selling products directly from the Urban Importers website now as well to individuals.
Venues are more than welcome to place their order through the website, but we find a lot of people just use text message or Twitter these days to place their orders.
Touching on that, how do use social media for your business?
I think social media, especially Twitter, has exploded really in the last six to twelve months.
It’s really the only form of marketing that I use for Urban Importers, and our venues probably use it to a slightly lesser degree.
It’s a great way of getting a product out there; it’s a great way of getting some exposure and meeting other people in the industry.
It’s been something that’s been quite successful because obviously people can talk about a product and can really open up a conversation.
But then if you see a lead for your product or your venue you still have to follow it up, and it still ends up being that you need to build a good personal relationship with prospective clients.
There’s no point getting your venue or your product mentioned if you don’t then do anything with those mentions.
What are your plans for the future?
Currently we’re in a process of negotiating the extension to our leases for the City Square venues.
Hopefully they’ll be finalised in the next month or so.
Then, ideally, we’d see where we’re at then.
We have had offers from people who wanted to buy the venues, but it’d be really nice if we got to ten years with Three Below, that’d be a great achievement for a hospitality venue.
In terms of Urban Importers it’s still very much in its infancy but looking at where I want it to be in five years’ time, I want it to be a well-known and profitable and successful wholesale and importing business.
I guess in the next six months we’ll really decide whether it had its own logistics or distribution arm, or if I use other people to do that.
There are positives and negatives to both, but at the moment it’s really a one-man band.
So it’d be great to employ people and get the products exposed more and more.