Lyons led by donkeys: the fall of a British empire (1950 – present)

Part I, about the early history of J Lyons, can be found here.

In the early 1950s, Lyons was the largest catering company in the world, with a capital of £10 million and exports to fifty countries. In 1954 there were 33,000 employees and 230 tea shops.

In 1951 the Corner House restaurants and hotels alone employed over 4,000 workers. On normal Bank Holidays the Corner Houses could expect to serve 250,000 meals.

Lyons engineers developed LEO (Lyons Electronic Office), the first business computer in the world. Large computers had previously only been used for military or scientific purposes. The 5,000 sq ft computer began use on 17 November 1951, and calculated stocking levels. From 1954 it calculated the bakery staff payroll.

Lyons introduced the American-style hamburger chain to Britain when it opened a Wimpy franchise in the basement of a Lyons tea shop on 277 Oxford Street in May 1954. By 1973 there were 1,100 Wimpy outlets in 34 countries.

Lyons Pure Ground Coffee was the highest selling coffee in Britain in 1953. Lyons launched its standard market teabag brand, Quick Brew, in 1955.

By 1956 a Big Four held 70 percent of the British tea market. Lyons held second place behind Brooke Bond.

Maryland Cookies were introduced in 1956. The company launched Ready Brek instant porridge in 1957, to outstanding success.

In 1961 Lyons divested its confectionery business to Callard & Bowser. With the growth of television advertising, middle-size sweet manufacturers had been forced to consolidate in order to reach a scale capable of launching their own campaigns.

In 1962 Lyons took most of its tea distribution vans off the road. The vans had delivered to independent grocers throughout the country. The company had reasoned that business was transferring towards the supermarkets. The decision was premature however, and allowed rival Brooke Bond to increase its market share.

By 1963 a joint venture with Schweppes, Rose Kia-Ora Ltd, was a leading soft drinks supplier in the UK, with 46 percent of the UK squash market.

In 1963 Lyons acquired Eldorado of Liverpool, the fourth largest ice cream manufacturer in Britain, and rebranded its ice cream business as Lyons Maid. The takeover took its share of the ice cream market to 34 percent, and Lyons was the second largest ice cream manufacturer in Britain (after Wall’s) throughout much of the twentieth century. The FAB ice lolly was introduced in 1967. The Greenford ice cream factory was the second largest in the world by 1973.

The computer division required extensive capitalisation, so it was sold to English Electric in 1964.

By 1966 Lyons had become the biggest supplier of pre-packaged cakes in Britain, and was the clear market leader with a 28 percent market share.

In 1966 Lyons had more than two thirds of the packaged ground coffee market.

Throughout the 1960s J Lyons was joint third in the British tea market alongside Typhoo, with around 15 percent market share, behind Brooke Bond and the Co-operative Wholesale Society.

By 1969 Lyons was probably the largest in catering sales and supplies in Britain.

In 1970 Lyons was the brand leaders in ground coffee. However its market share in tea was 13 percent, and it was far from the brand leader it once was. Quick Brew had a 8 percent share of the popular tea market. It was strongest in the South of England, especially London, where it held 17 percent of the market. By this time Horniman and Black & Green had been positioned as the company’s premium tea brands. Horniman was the company’s biggest tea seller in South Wales, and Black & Green was strong in Manchester and the North West.

In 1970 Lyons hotels held over 6,000 beds.

In 1968 it was argued in The Spectator that “You can grade the Lyons properties into four classes — redundant, non-profitable, underdeveloped — and Cadby Hall.” By 1969 the number of tea rooms had declined to 120, and many were loss-making. The Coventry Street Corner House closed in 1970. Between 1970 and 1972 the tea rooms were converted into Jolyon Restaurants.

Cadby Hall was closed in 1972, with production relocated to Yorkshire and Northamptonshire. Nearly 3,000 staff were affected.

In 1972 Lyons acquired Tetley Tea for £23 million. This gave Lyons the second highest market share for tea in both the British and American markets. In Britain Lyons now had 17 percent of the tea market, behind Brooke Bond on 40 percent.

Fox’s Biscuits of Batley was also acquired in 1972. In 1973, the ice cream manufacturer Baskin Robbins, with 1,600 stores in America, was acquired for £16 million.

Lyons encountered financial difficulties following the global oil crisis of 1973. In the early 1970s they had borrowed £250 million to finance acquisitions, mostly from non-British sources. Foreign loan repayments became expensive as the value of sterling fell. As a result, the company began to rapidly divest its core assets just to meet is liabilities.

In 1974 J Lyons dropped from the top 100 companies in Britain by market capitalization. In 1975 the company had capitalization of £39.5 million and a turnover of £249 million.

The tearooms and corner houses fell prey to the more trendy coffee bars of Charles Forte, as well as the increasing appeal of fast food and ethnic cuisine. The last tea shop closed in 1976.

In 1976 the 35 British hotels (with the exception of Tower Hotel) were sold to Rocco Forte’s Trust House Forte for £27.6 million. Forte promptly recouped £11 million in a year by cutting costs.

Also in 1976, Wimpy, with 676 UK outlets, was sold off to United Biscuits for £7 million.

In 1976 the Salmon and Gluckstein families were forced to relinquish voting control over Lyons. By allowing ordinary shareholders to have votes, they hoped to acquire more capital, which was desperately needed. Previously the families had had 6 to 7 percent of company equity but 61 percent of voting shares. By this time Lyons had a market capitalization of  over £40 million and sales of £650 million.

In 1978 Lyons was subject to a friendly takeover by Allied Breweries which valued the company at £64 million. The merged entity was known as Allied Lyons. The Cadby Hall sites were demolished in 1983.

The remant Lyons food businesses were sold off throughout the early to mid 1990s.

Ready Brek was sold to Weetabix in 1990.

Lyons Maid had been loss-making for several years, mainly due to increased competition following the entrance of Mars into the ice cream market. It was sold in 1991 to Clarke Foods for £12 million. There were 800 employees in Greenford, Middlesex and Liverpool. In 1992 Clarke Foods was acquired by Nestle.

In 1994 the Lyons coffee businesses were divested: ground coffee to Paulig of Finland and instant coffee to Philip Morris.

In 1994 after acquiring Pedro Domecq, the company renamed itself from Allied Lyons to Allied Domecq.

1994 also saw Lyons biscuits of Blackpool sold to Hillsdown Holdings. There were 780 employees.

In 1995 Lyons Cakes was sold to Tomkins of America for £35 million. The business employed 1,700 people in Britain and Ireland. Meanwhile, the Tetley Tea business was subject to a management buyout, valued at £190 million.

Lyons Quick Brew tea is still found in the UK, although distribution is extremely limited. Lyons Red Label tea can be bought from Waitrose. Lyons remains the highest selling tea brand in Ireland, with over a third of the market. Lyons Maid has been re-branded as Nestle. Lyons brand cakes, biscuits and freshly ground coffee are still sold, although without the presence they once had.

Lyons’ major weakness was nepotism. As late as the 1950s, the board was populated exclusively by family members. The Financial Times ran a headline “Too much Salmon is bad for Lyons”. A non-family member chairman was not elected until 1977. Although a public company, the majority of voting shares were controlled by the founding families until 1976. But by then, it was too late to save the company extant.

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