Powered up: Daniel Sherfield CA, CFO of Grind, talks about the growth of the brand, its city venues and ecommerce stream
It’s gone from being Silicon Roundabout’s all-day caffeine fix to a chain of cafes and ecommerce business. Daniel Sherfield CA talks to Cherry Casey about the growth of Grind.
This article first appeared in ICAS’ CA magazine.
If there is one word to describe the journey Grind has taken in the decade since its inception it would be evolution. Founded in 2011 as a single cafe on London’s Old Street roundabout, Grind now boasts nine venues across the capital, an ecommerce stream that retails direct to consumers and supplies its coffee to the Soho House group globally.
“The thing David [Abrahamovitch, CEO] got right is creating an amazing brand that people love,” says CFO, Daniel Sherfield CA. To make the brand adaptable and, therefore, scalable, they needed insight from someone “who could understand the economics and help make the right decisions at the right time”. And so, in November 2015, Sherfield was brought in from fitness brand Psycle to do just that. At this point, Grind had four venues, had recently started opening in the evenings as a cocktail bar and had just opened its London Bridge premises – including a kitchen – but was still figuring out how best to use it.
From 2015–2018, Sherfield’s main task was to work out exactly what Grind’s offering would be. “That’s the amazing thing about being a small business with a dynamic brand,” he says. “We were able to shift to suit what people really wanted. That’s part of our success.”
After noticing customers were coming to their venues for one or two cocktails then going off for dinner, Grind started to offer all-day dining. “The financial and operational dynamics of that business model is complicated, and has been a continual challenge we’ve worked through,” says Sherfield. But it was successful, and the decision was made to push forward on all-day dining, scale back on cafe operations, and look for franchise opportunities in airports and train stations. One thing Grind has never been, says Sherfield, is a “cookie-cutter business”.
But part of knowing when to make the right calls at the right time is knowing when to change track. While Grind’s 2019 Crowdcube fundraiser – the company’s third, this time securing £3,391,330 (251% of its target) – referred to openings in London Bridge, Waterloo and Victoria stations, that plan has had to be redrawn. “As the pandemic unfolded it became more and more clear that the Grind brand, and our ability to market that brand, is paramount,” says Sherfield. Franchising would have introduced a threat to that brand control.
In fact, Grind is not actively looking to open new sites at the moment. “It’s been a tough year, but out of it we have this amazing online business that’s thriving,” says Sherfield. “It’s what we want to focus on for now.”
A perfect storm
Sherfield describes the events leading up to March 2020 as “a bit of a perfect storm”, with 2017-18 having seen the firm first consider how to sell its product online, and 2019 allocating capital from a previous funding round to, among other things, building a bigger roastery, sourcing a digital agency and developing a new website.
“We thought, ‘Wouldn’t it be great if we could do £1m of sales a year through our online store over the next three to five years?’,” says Sherfield. “We started our first paid-for advertising in February 2020, then on 23 March the world changed.” One revenue stream “went to zero”, while the online side grew 20-fold in just a couple of months.
Sherfield spent spring and summer of 2020 trying to import stock. “It was back to proper start-up life,” he says, explaining the logistical difficulties of getting coffee into the fulfilment centre and back out to customers. “It was an amazing ride,” he adds. “We went from 500 people signed up to our coffee subscription service to over 20,000.”
That success has resulted in Sherfield overseeing the restructure of the business into two tangible arms: high-street venues on one side, online sales on the other. Grind’s 2,600 Crowdcube shareholders were involved too: “It was a big process to go through but it makes sense as the two are completely different operating models.”
When Grind was founded, the main focus was providing top-quality coffee in venues with a top-quality atmosphere. Both values remain, but as the business has evolved, a third focal point has come in to play – the sustainability credentials of its production line. Grind coffee is certified organic, the coffee pods it sells online are completely biodegradable – one of the first of their kind in the UK – and they’ve built direct connections with the farmers it sources from. “We’re still working with third parties [UK importers], but we do have a direct link with farmers, making sure they grow the coffee in the right way to the right standards,” says Sherfield.
In terms of financial impact, he explains that once the decision has been made to only buy coffee in the top 5% in the world, both in terms of quality and ethical production, the actual cost is less relevant. “My head roaster comes to me and says, ‘This is how much it’s going to cost this month,’ and I say ‘okay’… We have very few conversations about coffee prices.”
Sherfield acknowledges that, while Grind’s ethical methods are motivated by a genuine sense of responsibility, it’s also what today’s consumers want. “I’m not blind to the fact that it helps how we portray our brand,” he says.
Back to life
While Grind’s innovative approach to ecommerce has helped enormously during the pandemic, and will be a focal point for the future, it hasn’t replaced what was lost through high-street closures. “That’s why it’s amazing we’re coming back to life,” says Sherfield. He says the public’s reaction during the tentative early stages of post-lockdown has been “phenomenal – customers have been coming back in droves… We were doing 70% of sales [compared with the same period in 2019] just from our outside space alone.”
He is optimistic that consumer habits will not have changed drastically: “People still want to socialise with their friends.” But the impact on the high street of the new world of remote working, and the use of technology in the hospitality industry, are two factors he will need to keep a close eye on.
Using his CA training to bring strategic insight, says Sherfield, is the crux of his role. “Yes, we learned our debits and credits and how to prepare a set of accounts,” he says, “but the one thing that was continually discussed during training was: ‘How does the CA qualification create accountants that add value to the business world?’”
That concept has proved invaluable, he says, in a world where software can do much of the accounting a human once would have: “Everything relies on data-driven insights and making commercial decisions from that, so the role of the accountant has to be to take those numbers and impart direction to the rest of the business.”
Clear direction is something from which Sherfield has always benefited on a personal level too. “My mum and dad were both directors of small local businesses and I spent my teen years learning from them,” he says. “I knew from the age of 16 that I wanted to work in senior management in a growing business.”
After studying maths with economics at University College London, Sherfield joined the graduate scheme at EY. “I had a great five years,” he says. “It was an amazing programme, I studied for the CA at BPP London Wall, I still have good friends from EY and I met my wife there.”
Sherfield knew being an accountant in practice was never where he wanted to be long term, but his training provided the right foundations to move into small business. On secondment from EY, he got a job as Investment Manager at the Social Business Trust, a not-for-profit that helps social enterprises to scale up. “I loved every minute,” says Sherfield. “It gave me great exposure to social business models and how they worked.”
One such was Fashion Enter, a sustainable clothing company that particularly impressed Sherfield:
“They needed a head of finance to help them put the right structures in place and build their capabilities and their KPIs to really help them grow. I thought, ‘I can do that.’” Social Business Trust not only supported Fashion Enter, but placed him in the company for a one-year tenure – an experience he describes as: “Fantastic. It was a jump-off point, and gave me exactly the experience I needed to move into the small business world.”
Now firmly in that world, what is it about the start-up atmosphere that he loves? “Building,” he says. “Building something that either hasn’t been done before or something that I’m proud of. And I’m proud of Grind. I’m really, really proud of Grind.”