As the value of the pound tumbles and interest rates remain high, the UK is teetering on the edge of a financial crisis. Last week, the credit ratings agency S&P Global claimed that economic data suggests the UK is already in recession.
This has left many business leaders wondering how best to prepare their company for the economic downtu.
One business with experience of surviving a recession is the frozen-ready-meal brand Cook. Its sibling co-CEOs Ed Perry and Rosie Brown describe the 2008 crash as “the most challenging period” of the business’s 25-year history.
Before the recession, Cook had taken out a loan of £4.5m and used it to build a new kitchen and open 12 shops. Shortly after, sales plummeted by 20% over three months and Perry says the business came “as close to going bust as you can possibly get”.
How Cook survived the 2008 recession
The pair put the survival of the business during this challenging time down to three key decisions. Investing in people, investing in the product and refusing to take external investment.
“We knew that if we took outside financial investment it would compromise our ability to run the business in the way that we wanted to in the future,” Perry says. “It was like having a massive pile of money on the table and we had to keep sitting on our hands so as not to take it, even though it was bloody tempting.”
You come out of these challenging periods smarter and that’s where the opportunity is
Retaining this independence has allowed Cook to continue to invest in people and the planet, which helped the company to become one of the UK’s first B Corporations. The co-CEOs also point to the fact that it has shareholders that are aligned with the business and its values, rather than only being concerned with, what Perry describes as, “the little number on the bottom right-hand corner of the spreadsheet”.
While it may be appealing to reach for whatever financial help is available in a time of crisis, Perry says: “What’s most important is that you make decisions that don’t compromise the business in the long term.”
Don’t cut corners
The quality of the product is also “sacrosanct”, say Perry and Brown. As the cost-of-living crisis bites, soaring energy, transportation and ingredient costs have meant that many businesses in the food sector have had to reduce the size of their products or the quality of ingredients going into them.
Cook has seen a 14% increase in input costs over recent months. But Perry and Brown commit to “never compromise on the quality of the ingredients or the weight of the product”.
“We’ve been doing this for 25 years and when it comes to trading, all decisions have to be made with consideration for the customer,” Perry adds.
Some of this gap in margin has been closed with an average 5% increase in the price of its frozen ready meals. The pair were reluctant to pass on any more of the cost to customers as inflation has also forced many of them to tighten the purse strings.
Instead, the co-CEOs have looked to find efficiencies in other areas of the business. “You come out of these challenging periods smarter and that‘s where the opportunity is,” Brown says. “You find out exactly where all the flab is, you get creative, you do more for less and you find efficiencies.”
These have so far included making changes to the manufacturing process, implementing a hiring freeze and redeploying labour to areas of the business that add most value.
“While we cut every single cost in the business you could possibly cut, the one thing we didn’t compromise on was the quality of the ingredients,” Perry says. “Once you start making those kinds of compromises, you forfeit your right to survive as a brand and as a business.”
Preserving the culture
The final element which requires continued investment is culture. Brown says: “You keep investing in people because they’re the ones who are going to see you through the hard times.”
This commitment to improving company culture is part of the reason that Cook is regularly ranked among the top employers in the country.
Just as there was a conscious decision to try to protect the company culture during the 2008 financial crisis, as the country faces recession again Cook has continued to invest in its people. “Our starting point at the moment is a concern for our teams,” Brown says. “People are being really badly hit by what’s going on.”
Cook offers interest-free loans to employees, in a bid to support people when finances might be stretched. Uptake of its loan scheme is currently running at roughly five times the level of the previous year.
We’re not going to hunker down because there’s a storm going on outside. We carry on
The company also provides free hot lunches in its kitchens every day, has introduced a benefits scheme that gives staff discounts at a range of high-street brands, runs financial wellbeing events and hosts company socials. Brown says: “I think people need that moral support and sense of connection more than ever. It’s not rocket science. Ultimately, you care for people and they will care for your business in return.”
As a result, Brown and Perry believe the business is well-positioned to continue to grow, despite the present economic situation. “While the current economic circumstances are the most challenging since 2008, we are still planning to carry on growing,” Perry says.
Cook has ambitions to open up to eight new shops and 150 concessions over the next 12 months and will launch a subscription service for its frozen ready meals in the new year. “We’re not going to lessen our ambition for the business; we’re going to keep pushing forward,” Perry says. “We’re not going to hunker down because there’s a storm going on outside. We carry on.”
This persistence, as well as its continued investment in people and product, helped to see Cook through the last global recession. It may provide guidance for other businesses as we potentially face the next great recession.
