At the onset of the coronavirus pandemic in March last year, we caught up with Welbilt’s Senior Vice President and General Manager, EMEA and APAC, Phil Dei Dolori for a candid discussion about how the foodservice equipment heavyweight was dealing with a fast-moving global situation that touched all aspects of its operations. 12 months on from that interview, we caught up with him again to reflect on the lessons that have been learned, the difficult decisions that have had to be made and the prospects of a robust recovery…
Phil, we spoke last year just as Europe had begun locking down. Everybody’s understanding of just how significantly it would impact the business world was so much different to what it is now — and I think it’s fair to say that we all thought that a return to normality would arrive much sooner. How have you coped with that from an operational and management perspective?
Yes, I think we all expected it would be shorter and perhaps less deep than it was, but I think from an operational perspective we’re more fit now than we were. It was a very challenging 12 months but we’re in a different place now, culturally and operationally. Within the business, everybody had a little extra time, at least for a few months, where there were no commutes to work and things like that, which gave us the opportunity to connect with channel partners and end-customers more than we ever had, so that was a real benefit for us.
Our CEO actually started an internal communication programme, coincidentally a couple of months before the pandemic started, and as a senior management team we have become closer, more focused and more aligned so there are a lot of benefits that came out of what occurred last year.
What one thing that you know now would you have liked to have known 12 months ago?
I’d say there are two parts to that. I think we all wanted to know how long it would last and how bad it would be. That was kind of the common theme. But the other part of it is from an operator and a channel partner perspective. They were the ones that stopped and started, opened and closed, whereas for us as a manufacturer we had a very short period of time before we were open again.
It would have been nice if somebody had given us a blueprint which outlined how each country was going to react to the pandemic. Because if you look across Europe, and you look across to Asia or the Americas, there were different models and different governments reacted in different ways. If we could have had an idea of how different that was going to be, it would have made our lives easier and it would have made our operators’ and channel partners’ lives a lot easier.
The geographic nature of your role meant you were travelling frequently between countries prior to the pandemic. All of the lockdowns and restrictions must really have impacted your traditional way of working…
Yes, most of our time has been spent across video. There was some interaction in July when things had really calmed down in Europe, but it wasn’t as much as we would have had the previous year. I think everyone experienced that and if you were to ask the question of whether we are ever going to return to the way it was, the answer is probably not to that extent. You hit the one extreme where we’re on video conferences then you go to the other extreme where we’re always travelling. I suspect it will end up being some kind of balance in between.
Every large international corporation has been forced to make some incredibly tough decisions about the structure of their business operations in response to the pandemic. What’s been the most difficult call you’ve had to make?
Whenever you go through a period like that and have to restructure and adjust your business to the volumes, it’s painful. Nobody wants to do that. It’s a very difficult thing, but as difficult as it was for us, if I put myself into the shoes of what a restaurant owner or a chain restaurant had to do, their situation was a lot harder.
When I look at the teams within Welbilt, people have risen to the occasion. Many have taken on more work, they’re doing double duty and a lot of the time they are doing it from their home, at late hours in the evening. So the people within Welbilt responded in a heroic way. That goes back to the culture that we’ve been building with Bill Johnson, our CEO, but any restructuring is always challenging.
The foodservice equipment sector has had to completely revaluate its financial expectations and, at the height of the crisis, it wasn’t uncommon to see suppliers reporting sales declines of 40% to 50% year-on-year. What would constitute success for you this year given the economic backdrop?
I guess that if we were to go forward to the end of 2021 and look back, there are two things that would come to mind. One is that our employees feel they are safe, healthy and feel good about the business. And the other one would be from an operator and channel partner perspective — dealers, distributors, foodservice consultants, service companies.
If that group would look at Welbilt and say, ‘thank you for helping us get our businesses back in line towards growth’ — because everybody loves growth! — that would be a definition of success to me. If those things happen then we’ll meet all of our internal and external stated goals on revenues and earnings. That’s how I would look at success.
It was a very challenging 12 months but we’re in a different place now, culturally and operationally”
I suppose a lot will also depend on how quickly the different regional markets open up and the pace at which restaurant operators start bringing cash through their businesses again…
Yes, but it’s interesting because if you look at Europe it’s probably the most closed in terms of restaurants and bars compared to the other two regions, the Americas and Asia. But what we’re finding — and we thought this might happen but we didn’t think it would happen to the extent it is — is that business is booming for the supermarkets, convenience stores and bakeries.
We are now seeing supermarkets and C-stores starting to compete with restaurants. I’ll give you one example: there is a large supermarket chain in Spain that we were working with before the pandemic. We didn’t hear from them and then a few months ago they called us and said, ‘you know our business is groceries and we’re still learning foodservice, but we know we have to develop a takeaway programme’. That has now moved into delivery and the development of take-home paella with a solution around Convotherm, Merrychef and Garland induction.
They now have a huge take-home paella business and they are actually competing with restaurants, but that’s really helped our business. And it’s the same with convenience stores. They sell drinks and coffee and cigarettes and those kinds of things and they’d normally have a little baked goods section on the side. But now they’re saying, ‘I need to be more of a restaurant operator’. So those segments have really made up for a lot of the restaurant side that’s closed across Europe right now. I guess it’s an unintended consequence of the situation.
How has the pandemic impacted your approach to new product development? Is now the time to invest in developing new equipment or are you directing your resources towards the sale of existing technologies?
I was on a panel about four or five months ago with a large number of industrial companies from around the world and they were polling us on ways that we were reducing costs given that business has come down. And then they asked the question ‘is anybody not reducing costs in a particular area?’ I raised my hand and said ‘we aren’t, we are going to keep our budgeted level of spend in new product development and innovation’. And I was the only one in the group to say that. But that is exactly what we have done.
We kept our budgeted levels of innovation and new product development for the entire year. We launched the Crem EX3 coffee machine in the midst of the pandemic, we launched the Convotherm Maxx combi oven and we’ve worked with HCL on the digital side. So it was business as usual for new product development throughout the entire pandemic.
Nobody was on short-time work and it was all full speed ahead because it was very clear to us that if we do that, then in 2021-2022 we are going to see enormous benefits. And we are starting to see that already, particularly on the Merrychef and Crem side.
Every product we make is born digital and our target is to have 2.5 million connected appliances by 2025”
You make that sound like an easy decision, but in the midst of a global crisis, and with market visibility so poor, it must have required an enormous leap of faith. Many other companies would have halted such activities until the storm passed.
It was a strategic decision by Bill Johnson and the leadership team, but it was the most emotional decision because why are you going to keep your spend on NPI but reduce your selling and marketing and those kinds of things? But it was the right decision because frankly no one was doing it, and that’s our DNA. Innovation is our DNA.
As a global business, you got sight of how the pandemic affected the Asian markets prior to it impacting Europe, which provided some benefits in terms of knowing what was coming. Can you now use that as an indication for how quickly the European markets might get back to normal?
When I look at it from a big picture standpoint and you ask the question of which countries will recover quickly GDP-wise, it’s usually the ones that have quickly, efficiently and in a lasting way controlled the pandemic as much as they could.
Generally speaking, those are the countries that recovered economically the fastest. I won’t get into specific countries, but I think another factor to recovery — and this is where a lot of the European governments stepped up — is the fiscal stimulus that was injected into the economy.
In some countries in Central Europe I know they injected stimulus into the restaurant and bar segment, funding a significant portion of operators’ revenues. If you’re a country that is extremely tied to tourism then that’s probably going to work against your recovery, but on the flip side if you address the issues with the pandemic quickly and in a lasting way, if your country was investing fiscal stimulus and you aren’t so tied to tourism, that’s likely to be the fastest path to recovery.