Clashes of the titan
Giuliano Lotto, the man behind A-Z Restaurants, is not someone who can be accused of failing to stand up for his own interests. But as the group prepares to open its 12th restaurant and celebrate its 10th anniversary, Lotto may have put his celebrated company infighting behind him, as David Harris reports.
There are two things for which Giuliano Lotto is known: running fine restaurants and having spectacular arguments.
Let's deal with the arguments first. Since he transformed himself from stockbroker to restaurateur in 1992 Lotto has, in order of ferocity: fallen out with Gordon Ramsay after the chef walked out to open his own restaurant; had what he describes as a "war" with former fellow director and restaurateur Claudio Pulze over control of the company ("I would now say hello to him, I would not be rude, but we are not friends"); had a lesser but equally fast and furious conflict with ex-Zafferano chef Giorgio Locatelli shortly before he left A-Z; and wrangled with another A-Z director, Franco Zanellato (who left A-Z with a £1.6m payoff last year).
Can all these arguments be everybody else's fault? Well, yes, according to Lotto, although he admits to being "very difficult to work with".
He says: "I like to be in charge, like to be in command. But I also know that what I am preaching is right. The thing I do not like is to be shafted."
From Lotto's viewpoint the series of internal disputes has all been about who runs A-Z. He looks back with horror to the mid-1990s, when he did not have a majority stake in the holding company for the restaurants. He was the largest shareholder, with 45%, but Pulze and Zanellato both had 22.5% stakes and Ramsay had 10%, so Lotto could be outvoted when all three allied together.
"The only way to deal with this was to say ‘OK, let's regain control and get rid of this situation'. At a price, I have done it," he says.
Now he has 98% of A-Z's share capital, but all he really wants is 51%. He would welcome other investors, but "will never, never, give up control again".
Control does seem to have been what the internal battles were about. Lotto, who recognises the talents of those he has argued with - he may dislike Ramsay, but knows he is an "outstanding chef" - believes that part of it was about Pulze's wish for a bigger shareholding.
"Perhaps they thought, ‘Why should Giuliano have 50% of the business if we are the people who find the site, find the chef, create the restaurant'," Lotto says.
In Lotto's view, his former colleagues may have been talented and creative, but he put in most money in the first place and had no intention of diluting his shareholding any further.
What is perhaps most remarkable about all the arguing is that A-Z should have continued to prosper throughout.
Openings in the past couple of years include Alloro, Rosmarino and Teca. In March the group opens Timo (Thyme) - a 70-seat restaurant at the residential end of Kensington High Street. Lotto sees this as being a neighbourhood restaurant similar to Rosmarino, the site in St John's Wood.
He now favours neighbourhood restaurants for straightforward commercial reasons: there are lower rents outside the West End, less competition and, if the area is right, plenty of high-earners to spend money.
Timo will be another Italian restaurant, charging £26 for a three-course dinner. The kitchen will be run by ex-La Spighetta head chef Valerio Daros.
Beyond that, Lotto speaks of consolidating because of the economic downturn, but he has another site at 142 Wandsworth Bridge Road, which may end up being an Italian neighbourhood restaurant.
He denies rumours that he is considering selling the French restaurants Aubergine and L'Oranger. "The only move I am interested in is getting La Spighetta out of the basement and on to ground level," he says.
More confidence
A few years ago, Lotto was inclined to describe himself as a businessman, but there is a definite feeling that as A-Z approaches its 10th anniversary he now has more confidence in himself as a restaurateur.
He says: "There came a point when I started thinking, well, if Claudio and Franco can do it, I can do it as well. That's when I started trusting my own abilities."
That confidence is growing. His relationship with Zanellato remains strong enough so that despite Zanellato's departure from A-Z, the two men have a joint venture in the Thai Noodle Bar, a £10-a-head restaurant opening near Aubergine in Park Walk this month.
Locatelli still has a 25% stake in Zafferano, so would make a killing if it were sold.
In his last year at Zafferano, Lotto says, Locatelli earnt £90,000 in wages and took a £75,000 dividend from his shares. Dividends have now ceased, "unless you can explain to me the logic of paying a dividend to Giorgio so that he can set up in competition to us".
A-Z Restaurants
A-Z's restaurants are registered individually, with A-Z Restaurants as holding company. A-Z in turn is controlled by its main shareholder Fineight International, a company incorporated in Panama. Companies House records the ultimate parent company as unknown.
Lotto says that the Panama company is a family company set up 18 years ago, "which has a number of assets".
In the latest recorded accounts (to 31 March 2000) A-Z had a turnover of £9.4m and a gross profit of nearly £3.3m. The company says that for the year to 31 March 2001 turnover rose to £11.1m.
Who is Giuliano Lotto?
Giuliano Lotto first came to England because his father, then chief executive of a big Italian insurance company, found himself on a Red Brigades' hit list in the 1970s.
The infamous Italian terrorist group was kidnapping children of the wealthy and sending body parts in the post to the families to secure ransom payments. As a precaution, young Lotto left Milan to attend school in the safer atmosphere of Shiplake College, Henley-on-Thames. His sister was sent to Switzerland, other family members elsewhere.
"Was I ever at risk? I don't think so, but better safe than sorry," he shrugs.
It was a colourful start for Lotto, now 42. He went on from school to read economics at university and then became a stockbroker before deciding to turn restaurateur in 1992.
The A-Z restaurants
The group owns 12 restaurants, all in London. They are Alloro; Aubergine; two Memories of China; L'Oranger; two Spigas; La Spighetta; Rosmarino; Teca; Timo (opens March) and Zafferano.
