The Recipe for Operational Excellence: Lessons from Hotel Chocolat’s COO

 In conversation with Kaizen Institute

Hotel Chocolat is a British chocolate manufacturer and cocoa grower, founded in 1993 by Angus Thirlwell and Peter Harris. The business rebranded as Hotel Chocolat in 2003 and opened its first retail store in Watford that same year. It is the only company in the UK to own its own cocoa farm, the Rabot Estate in Saint Lucia, acquired in 2006, and sells directly to consumers across retail, digital and wholesale channels. In January 2024, Hotel Chocolat was acquired by Mars, Inc. 

Matt Margereson has been part of Hotel Chocolat’s leadership since 2006, progressing through successive operational roles, Supply Chain Director, Operations Director, Managing Director of Operations and Chief Operating Officer, before moving into his current position as VP Global Supply, People & Technology. Across nearly two decades with the business, he has overseen every major phase of its operational growth. What his experience reveals, and what tends to get lost in conversations about continuous improvement, is that methodology alone accounts for very little. The conditions that make improvement stick are almost entirely cultural. 

In this interview, recorded in 2021 and the first in a four-part series produced with Kaizen Institute, Matt reflects on how Hotel Chocolat built those conditions, what it cost, and what it continues to require. 

A culture of experimentation

How did Hotel Chocolat’s origins shape the way the business approaches change today? 

-Matt  

We started as Choc Express, an online chocolate business, at a time when buying anything online was still a leap of faith. The whole model was built on making the experience dependable: the product would arrive, be of good quality, and customers could trust it. From the very beginning, the culture was about testing a hypothesis, reading the result honestly, and acting on it. 

The first store opened in Watford in 2004, and Angus and Peter worked the floor themselves. That was not symbolic; it was a deliberate decision to get direct, unfiltered feedback from customers. What emerged over the following years was a genuinely multi-channel business: digital, retail, wholesale, corporate. Not because we had a grand strategy, but because we kept testing where the opportunity was and committing when the economics made sense. That test-and-learn instinct became the company’s operating system. It is still how we work today. 

The power of integration

Hotel Chocolat controls its full supply chain, from cocoa farm to point of sale. What does that level of integration give you operationally? 

— Matt 

It can look like over-control from the outside, and I understand that perception. But vertical integration is what enables us to improve and adapt without needing anyone else’s permission. When every link in the chain is yours, you can reconfigure quickly, flex inventory between channels, and make decisions at pace. 

The pandemic made this visible in the most direct way possible. The evening the first lockdown was announced, we were on a management call within fifteen minutes. Within days, we had withdrawn stock from retail, reconfigured our fulfilment operation, and built a dynamic hamper assembly process to handle demand we had never previously seen. Items per transaction had tripled, and the website was overwhelmed within an hour of opening each morning. None of that would have been possible had we been dependent on third-party partners. The Kaizen Institute partnership contributed directly to that capability: the operational standards, the daily routines, and the short-interval control practices we had built together meant that people knew exactly what to do, even under exceptional pressure. 

Culture over programme

You draw a sharp distinction between a continuous improvement programme and a continuous improvement culture. What is the practical difference? 

— Matt 

A programme has a start date, a team, and eventually an end date. A culture has none of those things; it is simply how people work. My view is that if you have a genuinely driven culture, you cannot stop continuous improvement. You can try to reduce its formality, but people still find ways to improve it. The risk of a purely programme-based approach is that gains regress the moment the improvement team moves on to the next priority. 

At Hotel Chocolat, every area leader is responsible for improvement in their domain. There is a coordinating function that provides governance and prioritisation, but the doing belongs to the people closest to the work. The analogy I use is safety: if safety is only the safety team’s responsibility, what happens when they are not looking? Improvement works the same way. If it is not embedded in your leadership, you will always be fighting entropy. 

The waterline principle

You describe a ‘waterline’ when it comes to improvement opportunities. What do you mean by that? 

— Matt 

The honest reality of running an improvement-oriented business is that there are always more ideas worth pursuing than the organisation has bandwidth to execute. That is not a problem; it is a sign of a healthy culture. But it means the real discipline is not generating ideas; it is choosing which ones to act on right now and understanding the true cost of going after them in terms of people’s energy and operational disruption. 

We call it the waterline: what gets above it? I think this is one of the most under-practised skills in change management. My advice to anyone starting a continuous improvement journey is to start small, start focused, and take honest feedback seriously. Get some early wins within a single team before expanding the scope. The more cross-functional a project becomes, the more stakeholder management starts to outweigh the actual improvement work. 

Partnership through values

Cultural alignment seems to be a filter you apply not just when hiring, but when choosing partners. What has made the Kaizen Institute relationship work? 

— Matt 

We approach partnerships the way we approach hiring: values first. The question is never just whether someone can do the work; it is whether we share the same operating principles. What makes the Kaizen Institute relationship work is that it functions as a genuine partnership rather than a client-supplier arrangement. They are practitioners, not theorists. They work on the floor, they challenge us honestly, and they do not always tell us what we want to hear. 

We do not always agree; in fact, some of the most productive moments in the relationship have come from disagreement, typically around methodology rather than goals. That tension is healthy. What makes it sustainable is the frankness on both sides and the fact that neither party treats the relationship as transactional. I have never known a relationship to improve because of not talking. 

Managing change sustainably

Hotel Chocolat has been through rapid growth and significant operational pressure. How do you manage the pace of change without exhausting the organisation? 

— Matt 

This is something I think about carefully. After the sustained pressure of pandemic-era operating, my primary concern was onset fatigue, the accumulated weight of high performance under exceptional circumstances over an extended period. Change is a form of energy expenditure. Pursued without regard for people’s capacity, continuous improvement stops being an asset and starts causing damage. 

My principle has always been robustness first, then reform from a solid base. Do not restructure whilst you are moving at pace. Stabilise, embed, and improve from a position of confidence rather than chaos. I also think leaders need to be honest about the fact that improvement journeys are not linear. Things do not simply get better from one day to the next; sometimes, you take two steps back before you move forward. Building teams resilient enough to absorb that, and being transparent about it when it happens, is one of the most important investments a business can make.

Key takeaways 

What Matt Margereson’s account makes clear is that the conditions for sustained continuous improvement are built long before any formal programme begins. At Hotel Chocolat, the test-and-learn instinct that originated with the founders in the late 1990s created an organisation that was culturally prepared to improve before it had the methodology to formalise it. The role of structured improvement practice, brought in through the Kaizen Institute partnership, was to give that instinct rigour, consistency and measurability, not to substitute for it. 

The specific lessons that emerge from his experience are worth carrying into any improvement context. Ownership at the line leadership level, not by a central team, determines whether gains persist. Prioritisation, the waterline, is a harder discipline than idea generation, and most organisations underinvest in it. And the pace of change must be calibrated against people’s capacity to absorb it: improvement pursued faster than culture can embed it produces fatigue, not performance. 

Looking ahead 

Hotel Chocolat’s next chapter is its most operationally ambitious. The business is preparing for a wholesale infrastructure upgrade across systems, warehousing, automation, and governance in new international territories, as it pursues its goal of becoming a globally recognised premium direct-to-consumer brand. For Matt Margereson, the challenge is not simply one of scale, but of ensuring that the cultural foundations which have sustained the company’s performance survive the transition to a more complex, more distributed organisation. 

The ESG dimension is equally present in that future. Adding value at the primary end of the supply chain, in Ghana, in St Lucia, at the cocoa farm level, is simultaneously an environmental commitment and an operational improvement: it reduces transport complexity, deepens supplier relationships and distributes economic benefit more equitably. It is, in Matt’s framing, kaizen applied not to the factory floor alone, but to the entire value chain and the communities within it. 

As Matt Margereson observed during the conversation:

 “The next ten years will unequivocally cement us as the global premium chocolate direct-to-consumer brand, but the foundations for that are the culture and the ways of working we have built over the last fifteen years.” 

Continue your journey with more episodes of the Hotel Chocolat Webinar series. The conversation continues in Episode 2.