Fauchon: Difference between revisions

Founded in 1886 in Paris, Fauchon is a French gourmet food and delicatessen company.^[1] Fauchon is considered a major reference in contemporary French gourmet foods,^[2] and has 76 outlets in around twenty countries in 2016.^[3]

The founder of the Fauchon brand, Auguste Fauchon, was born in Calvados in 1856. He moved to Paris in 1880, where he began to work as a street vendor, moving on to become a wine and spirits merchant. In 1886, at the age of 30, he opened a fine foods outlet on Place de la Madeleine in central Paris's 8th arrondissement. This first shop still exists, and was totally renovated over a century of expansion and transformation.

The quality of the products made by Fauchon and its numerous approved suppliers^[4] quickly made it well-known internationally,^[5] and it came to symbolise French-style luxury. In 1968, French radicals chose to raid Fauchon and distribute foie gras to the poor.^[6] During the Second World War, restrictions and rationing made business difficult for the company. Auguste Fauchon died in 1945 and his children sold the company in 1952.^[7]

In 1952, Joseph Pilosoff, the former owner of "Chocolat Poulain", "Ciseaux d'argent" in Saint-Cloud and "Aux 100000 chemises" in Paris, took over Fauchon and built up a partnership with Air France. He also expanded the name abroad, opening new Fauchon outlets including in Japan at Takashimaya department stores in 1972. When Joseph Pilosoff died in 1981, his daughter took over at the head of the company. However, she too died soon thereafter, in December 1985, in a fire on the company premises.

In 1986, Joseph Pilosoff's granddaughter, Martine, and her husband, Philippe Prémat, became the owners of Fauchon.^[8][9] Martine Prémat's management proved difficult. Turnover had been flat since the beginning of the decade at around 250 million French francs (some €38 million), with losses of FF5 million in 1991, FF4.7 million in 1993 and FF11.9 million in 1996, and debt standing at FF73 million (€11 million) and a negative net equity of FF4.9 million.^[10]

The company strategy to sell its products in mass-market superstore chains such as Carrefour and Auchan,^[10] was sharply criticised, and the management was reproached with running the risk of spoiling the company's image, making it commonplace,^[11] and was also criticised for making management errors.

Despite attempts to expand the group in the 1990s by opening shops in Geneva and Saudi Arabia – only to close them a few years later – or by sponsoring the Paris Dakar rally, Martine Prémat finally sold the company to Laurent Adamowicz for FF240 million (€36.6 million)^[10] in March 1998,^[12][13] including the freehold of the buildings on Place de la Madeleine, sold the following year.^[14]

Former investment banker, graduate of business school^[15] and also experienced in the field of luxury products, Laurent Adamowicz positioned the brand on the gourmet foods market. He launched new products^[16][17] and ad campaigns, renovated points of sale, withdrew the brand from mass-market outlets and renovated the historical Tea Salon on Place de la Madeleine.^[18] He started a new partnership with Air France, and promoted young pastry chef, like Pierre Hermé, Sébastien Godard, Christophe Adam, Dominique Ansel.

As soon as the year 2000, Fauchon became a growing and profitable company again, with 90 million Euros ($135 million) in sales and 5 million ($7.5 million) in EBIT for 2002,^[19] and with a strong desire to conquer new markets. Fauchon opened new stores in Japan, in South Korea, Taiwan, the Middle East, Europe, and finally in the United States^{[20][21][22][23]} where it never had a store before, investing FF60 million (€9.2 million) in five years in the US market,^[24][25] with a diversified investor group that included Michel Deroy and Jean-Francois Toulouse, former owners and managers of Dock de France supermarkets, the investment fund Matignon Investissements et Gestion, the publicly listed UK fund Intermediate Capital Group, and Barclays Capital Development France.^[26][27] Barclays Private Equity France, a subsidiary of the Barclays plc Group, backed Laurent Adamowicz in his takeover of Fauchon to participate in its development in France and abroad.^[28]

In France, the acquisition of Flo Prestige delicatessens for €39 million increased the number of outlets in Paris by 12 stores.^[29] In 2003, the Fauchon network included 650 franchises, 16 of its own shops, of which three were in New York and 13 in Paris.^[30][31]

The acquisition of the Flo outlets in Paris in 2002 and the opening of three shops in New York led to a very sharp rise in income between 1998 and 2004, but a decline in Fauchon's net profits.^[32] In Spring-Summer 2003, Fauchon, heavily endebted, was affected by the collapse of the tourism market with the combination of several events : the Iraq War and the fall of the Saddam Hussein regime in April 2003, followed in May 2003 with the epidemic of the Severe Acute Respiratory Syndrome (SARS) virus, and then the unprecedented heat wave in Europe that hit France particularly hard with over 15,000 dead in August 2003.

In January 2004, Laurent Adamowicz sold his interest in the company and left his CEO's office to Michel Ducros, one of the sons of Gilbert Ducros (1928–2007), the founder of the Ducros spice business.^[33][34][35]

From 2004 onwards, Michel Ducros bought out most of the other shareholders, private and institutional, and will acquire between 2005 and 2009 all of the shares held by the Barclays Group, the 36% stake owned by La Compagnie du Bois sauvage, the stake held by Matignon Investissement & Gestion,^[36] and lastly the minority shareholdings.^[37][38] "I am an entrepreneur, I invest in the long term," he explained.^[39][40]

In 2004, the new shareholders adopted a strategy that aimed to boost profits by selling off those assets they deemed to be non-strategic, closing stores in Russia and the United States,^[41][42][43] selling their ready-prepared meal tray business to the Fleury Michon group,^[44] and finally selling the Fauchon Paris stores to the company's rival Lenôtre.^[45][46] Within the space of 6 years, Fauchon cut back its workforce by 700 employees, from 900 to 200 people.^[47]

Michel Ducros revised Fauchon strategy with all its suppliers and set up a strict sourcing, to promote the French savoir-faire^[48] and develop exclusive receipts.^[49] Fauchon continues to produce most of its own breads, cakes, pastries and delicatessen products on its premises (in the Paris suburb of Courbevoie for cakes and pastries).

In 2013, after the departure of the CEO Isabelle Capron,^[50] Michel Ducros appointed Eric Vincent as CEO, which announced ambitious plans for the company, aiming to have 100 outlets by 2017 (from 63 in 2013), mostly in franchises.^[37]

Despite the lack of success in the United States and China in 2009,^[51][52] Fauchon still aimed at international development on several big markets (Japan, Middle East, Asia and South America).^[53] Fauchon had some 60 stores and restaurants around the world in 2013.^[54] Fauchon reinforced its presence through Asia in Hong Kong in 2014^[55] and Thaïland,^[56][57] and invested in North America,^[58] and the Middle East, where new opening are concentrated.^[59]

On the verge of bankruptcy in 2004 (with losses of €30 million),^[60] Fauchon made its way back to a smaller loss in 2009, and in 2013 posted an operating profit of €900,000 on sales of €50 million.^[32] Fauchon employs 270 people in 2016, operates 76 retail outlets and posts sales revenue of €180 million (including sales by franchises), 80% of which on international markets.^[3][61]

In September 2015, Fauchon set up a joint venture to establish and manage its first five-star hotel in downtown Paris, Place de la Madeleine.^[62] It should open in January 2018 and aims to become the reference for the next Fauchon Hotels in the world.^[63]

Main competitors of Fauchon on the worldwide gourmet and luxury food products scene include Harrods and Fortnum & Mason in London and Mariage Frères, Le Palais des Thés, Dammann Frères, Kusmi Tea, Lenôtre, Pavillon Ledoyen, and Hédiard in Paris. Many more competitors emerged in the last decade on the international scene. For instance, as of 2015, Maison Kayser had 20 outlets in Paris, 25 in Japan and approximately 140 internationally. Ladurée also boasted about 100 outlets in 2015: 25 in Paris and the rest in 20 countries. As for Lenôtre, the world-renowned company founded by Gaston Lenôtre, as of 2015, it had 37 stores in 8 countries.

Also, former Fauchon pastry chefs Pierre Hermé, Dominique Ansel, and Christophe Adam each opened their own company competing with Fauchon in the pastry department. Pierre Hermé alone had 37 stores in 7 countries as of 2015.

In Thomas Harris's book Hannibal (1999), the infamous fictional serial killer Hannibal Lecter, while on a flight from Europe to America, waits until everyone is asleep before producing a Fauchon food parcel of aromatic truffled pate de foie gras and Anatolian figs, as well as a half bottle of St Estephe which Harris says he favours.

In Cast Away, the 2000 movie directed by Robert Zemeckis, Chuck Noland, the FedEx executive (starring Tom Hanks) hands his colleagues before they board the plane, a Fauchon bag containing fresh baguette bread from Paris. The distinctive Fauchon logo of the bag stands out. Later in the movie, one wishes he had kept the bag.

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