Paul Mizen reveals...

He’s gone from a fruit and veg barrow in Southend high street to supplying national firms with local produce via a single website. EN reaches for the dessert trolley as E-foods boss Paul Mizen reveals...

“We invited seven others to come in on the deal and two declined at the last minute,” says Paul Mizen. “One of them informed my old company – so that caused a bit of excitement. They suspended me when they found out.”

For the then sales manager at NCB Foodservice, the suspension provided added impetus to move forward with his plans to set up a rival food procurement firm. He wanted to supply national food service companies with ingredients from local accredited suppliers via one internet-based central purchasing system.

In Mizen’s back bedroom he and five other parties, including his accountant and advisor on the deal, Kris Clayton (who was given free shares as payment for his services), an IT provider and three catering suppliers, invested £115,000 (split roughly six ways) to set up E-foods Ltd. The deal in 2004 took six months to complete with Mizen’s investment sourced from savings and loans.

Mizen says most of the original investment went on IT. He says, “For me, in any customer-driven business you need good senior management in place every day and the right IT to back that up. The big focus and the big spend has always been on IT.”

Indeed, the E-foods bosses have spent £500,000 on IT in its five years of trading with, Mizen says, most of the firm’s profits farmed back into developing its IT system. He says this meant he didn’t take a salary for the first six months of operation and worked on a minimal wage for the next twelve.

“But you have to start somewhere,” Mizen says. “I think too many people try to take too much money out of the business straight away. That’s why they fall on their backsides. I had an assistant who was earning more money than me for the first 18 months.”

E-foods’ six original shareholders have since become four. One was bought out for his original investment in the first year of trading. Another sold his shares for three times what he paid when he needed a cash injection for his own business in October 2008.

“All the shares were taken by the other E-foods shareholders increasing their holding,” Mizen says.

In four years Tameside-based E-foods has added 200 suppliers to its system, providing fresh meat, bakery, dairy, deli and frozen goods to around 100 customers including Thwaites brewery, Stanley casinos and The Priory – as well as hotel and restaurant groups, and contract caterers.

Mizen says he charges suppliers “as little as possible”. He explains, “The customer doesn’t pay to use the system, the supplier does. If the suppliers didn’t work with someone like E-foods they wouldn’t be able to supply national companies. National companies don’t want 25 different invoices coming through and 25 different price levels from suppliers.

“With us they get one price level right across the country whether in Scotland or Devon, they get one invoice for everything rather than 40 or so for the average hotel, they make one payment to E-foods and we turn payments around in two working days. The idea is we take away the paperwork trail.”

Mizen says E-foods’ turnover has grown by roughly £3 million to £12.7 million and a net profi t of £250,000 in 2009. He expects turnover to reach £18 million in 2010.

He has just confirmed that E-foods is to enter into a venture with an Italian company, Crai Italy, to bring authentic Italian ingredients to its UK customers.

“We are going to bring pasta, tomato sauces and meats direct from Italy through the new company Craiuk,” he says. “We won’t just be looking at current customers, we will be looking at supermarket groups too because we believe we can bring products to the UK direct from source and save our customers money.”

Asked how the Craiuk deal compares to setting up E-foods he says, “E-foods is my best, without a doubt, but Craiuk is good. Very good in fact.”