Category Archives: Hospitality

Roaring trade: a history of J Lyons (1894 – 1949)

J Lyons was the largest catering company in the world in the first half of the twentieth century. It developed the first business computer. It introduced household-name brands such as Ready Brek and Wimpy Hamburger. Today, the Lyons brand itself has all but disappeared.

Barnett Salmon and Isidore Gluckstein arrived in London from the Netherlands and Germany in the 1840s. Originally tobacco wholesalers, by the 1880s they had established a tobacconist chain which undercut rivals by passing on bulk discounts to customers. With 140 shops, they were the largest retail tobacconists in Britain when they were acquired by Imperial Tobacco in 1902 for £400,000.

In the 1880s, Montagu Gluckstein, a travelling partner in the firm, complained that pubs were the only place he could find refreshment. Gluckstein had identified an opportunity, and suggested that the company enter the business of non-alcoholic refreshment for themselves. A trial was established whereby the company catered for the Newcastle Exhibition of 1887. Contracts for other exhibitions followed.

In 1894, a new public company was established with capital of £120,000 to pursue catering further. The original stakeholders were Montagu, his brother Isidore, brother-in-law Barnett Salmon (Nigella Lawson’s maternal grandfather) and distant relative Joseph Lyons. The Lyons name was adopted to distinguish the company from the Salmon & Gluckstein business.

The first Lyons tea shop opened in September 1894 at 213 Piccadilly. It had 200 seats and a £30,000 lease. After a year the shop had made a profit of £11,400, and the company was able to pay a dividend of 10 percent.

The first Lyons Tea Room was sited at 213 Piccadilly
The first Lyons Tea Room was sited at 213 Piccadilly

The early tea room exteriors were enticing and extrovert, and the interiors were often glamorous, and intended to evoke the great Victorian exhibitions and Parisian cafes.

In 1895 the Lyons tea shop girls went on strike, in protest against low wages.

In 1896 Cadby Hall was opened in Hammersmith to centrally produce baked goods for the company’s 17 tea shops. By 1900 there were 37 tea shops in London, and expansion had begun in the provinces, with six branches in Manchester, four in Liverpool, and two each in Leeds and Sheffield.

Quality was good and prices were reasonable. The tea rooms were particularly popular throughout the daytime with lower middle class office workers. Cinema and theatre-goers patronised the chain on evenings.

In 1909 the first Lyons Corner House was opened on Coventry Street. The Corner Houses were much larger than the tea rooms, with a greater appeal to the middle classes. Live bands and an informal atmosphere cemented their popularity. The Coventry Street outlet became the Lyons flagship, and seated 2,000 diners on multiple floors. It was the largest restaurant in the world. A second Corner House at the Strand opened in 1915, capable of seating 1,200 diners.

J Lyons was one of the largest caterers in the world by 1911. Half a million meals were served every day throughout 200 shops and restaurants. The company employed over 12,000 people, including 2,000 people at Cadby Hall. The Cadby Hall works covered ten acres and included sixteen bakehouses, five cold storage rooms and three butchers’ shops.

20,000 people were employed by 1913. J Lyons was the largest baker in London, the largest tea merchant in the world and the largest restaurant operator in the world.

Lyons also expanded into hotels, building the Regent Palace Hotel in London at a cost of £600,000. When it opened in 1915 it was the largest hotel in Europe with 1,028 bedrooms.

By 1915 Lyons tea was far and away the market leader: five million packets were sold every week by 160,000 shopkeepers. The company accounted for one in four cups of tea sold in London. That year the Surrey Mirror heralded Lyons as a national institution, ranking only behind the Tower of London and the British Museum.

In 1917 Lyons had over £2 million in capital. By 1919 there were 182 tea shops, making it easily the largest chain of its kind in the country.

Tea, coffee, bread, cakes, ice cream and groceries which had originally been produced for the tea rooms began to be sold directly to the customer, all manufactured at the company’s Hammersmith site.

In 1918 Lyons acquired two leading packet tea companies, positioned second and fourth place in the market respectively: Horniman of London and Black & Green of Manchester. The acquisitions were intended to increase Lyons’s market share in the North of England: Horniman was strong in Yorkshire and G&B strong in the North West.

In 1919 the company had a share capital of £3.5 million. By this time Lyons was likely the largest catering company in the British Empire.

By 1919 Cadby Hall was struggling to keep up with demand, so Lyons acquired a 30 acre freehold site at Greenford, on the outskirts of London. In 1920 the company opened the largest tea packing plant in the world there. Coffee, cocoa and confectionery production were also transferred to Greenford. By the early 1920s the company was the largest food producer in Europe.

In 1922 it was calculated that seven million people drank Lyons tea each week.

In 1922 Lyons opened the Cumberland Hotel at Marble Arch, which was the largest hotel in Europe. In 1923 the Coventry Street Corner House was extended to create what was likely the largest restaurant in the world, with seats for 4,500 diners.

By 1923 ice cream manufacture at Cadby Hall had reached the mass production scale.

In 1930 Lyons was the 20th largest company in Britain, with a market value of £12.1 million and 30,000 employees. Ten million meals were sold each week. Lyons held 14 percent of the packet tea market, with over 1.25 million packets sold every day.

The teashop chain continued to grow strongly until the onset of the Great Depression. Teashop losses between 1934 and 1938 totalled £374,000. Despite this, due to its manufacturing and hotel concerns, the company remained the largest catering company in the world in the latter half of the 1930s.

By 1937 there were over 42,000 employees.

In 1939 Lyons produced 3.5 million gallons of ice cream.

By 1939 Lyons had 253 tea rooms. Due to wartime labour shortages, self service was introduced at the tea rooms from 1941, and rolled out across the chain from 1945.

From the late 1940s the company’s catering arm supplied the Wimbledon Lawn Tennis tournament.

Part II of this post can be found here.

A history of Burger King in the UK

Burger King entered the UK in 1976 with a Haymarket, London location. The chain claimed to aim at a higher quality market than McDonald’s, who had arrived in the UK two years earlier.

By 1983, there were nine outlets in the UK, although the chain was suffering heavy losses. At this point, the European operations headquarters were relocated from Zurich to London.

Expansion continued at a slow but steady rate: by 1987 there were 14 outlets, including three drive-through locations. Like many of the American fast food chains, it struggled to succeed in the UK until it found a British partner.

In 1988 Burger King acquired eight Quick hamburger chain sites from Whitbread for around £7 million.

BK’s big expansion in the UK occurred in 1989. That year the American parent company had been acquired by the London-based hospitality giant Grand Metropolitan. GM also owned the British-based Wimpy Hamburger chain, and converted 150 counter service Wimpy outlets into Burger Kings, to take the chain’s UK total to 180 outlets.

Another large expansion came in 1996, when roadside hospitality giant Granada began to convert some Little Chef outlets into Burger Kings. Conversion of Little Chefs to Burger Kings had been found to increase turnover by as much as 100%. By 1997, there were 465 BK outlets in the UK.

McDonald’s UK

[youtube http://www.youtube.com/watch?v=_oyLjRJHd4I?list=PL8F7A012BD699EF07&w=560&h=315]

The McDonald’s UK series of advertisements are clever. They’re almost anti-ads. They don’t shove anything down your throat. They just tell you about what McDonald’s is and what it offers.

The production is very naturalistic.

They’re attempts to dispel the main fears that hindered McDonald’s in the UK back in the early 2000s. Health concerns, people not knowing what was in the food. The idea that McDonald’s was this greedy, faceless American corporation intent on swallowing up the world.

The ad series is unpretentious, British, honest.

How should KFC move forward?

It was recently announced by the research company Technomic that KFC is no longer the leading chicken based fast food company in the US. KFC, the leader since the 1950s, has been overtaken by Chick-fil-A, which had sales in 2013 of $5 billion versus KFC’s $4.22 billion.

Further humiliation for KFC comes from the fact that Chick-fil-A is not even present in some US states and is under-represented outside the South East of the country (New York has only one outlet). Its stores don’t open on Sundays. However its outlets make more than three times the average KFC outlet.

KFC is in decline in the US, down to 4,491 outlets from a 2004 peak of 5,500. I think it has struggled, in part, because it has moved away from its core offering of fried chicken, instead heavily promoting the likes of grilled and roasted chicken for years. It even jettisoned the “Fried” component from its name in 1991, as if it were embarrassed about itself.

kfc wrap, salad and grilled chicken burger
KFC have introduced healthier menu items in recent years

For KFC to succeed, I think it needs to market itself as an indisputable “treat”. Don’t deny that fried food is unhealthy, but imply that everyone can/should have some every once in a while. Krispy Kreme hardly markets itself as a healthy option, does it? Despite recent trends, there is a market for this kind of product.

To take advantage of the popularity of Chinese food, which has a heavy emphasis on fried chicken, introduce Asian influenced dips (sesame, soy, tomato, plum) and side dishes of rice. Market it as “KFC Global Flavour” or “KFC Heart of Asia”. Maybe introduce other fried chicken concepts from elsewhere in the world as part of an ongoing series of new products and variants. South Korea has a double fried version of fried chicken, for example.

How about Original Recipe Extra Spicy: the standard Original Recipe product, but with perhaps 50% more seasoning? Or try different seasoning mixes all together: ie, English seasoning, which would be sage and onion based, or Mediterranean seasoning, which would be lemon and thyme based.

Whatever KFC does, it needs to do something different than it is doing right now. And international growth is sluggish too, with a 3% growth rate largely explained by expansion into virgin territory. Obviously that can only mask stagnant sales for so long. Once they’ve expanded as far as they can, where then for growth? The only option will be to increase outlet sales.

What next for Wetherspoons?

An abandoned pub
An abandoned pub

Wetherspoons now have 900 outlets, and plan to open a further 50 throughout 2014. The key areas for expansion are suburban locations, smaller market towns which hitherto lack an outlet, and the Republic of Ireland.

A sound case for expansion. However, Wetherspoons are known for operating pubs that have two to three times the area of an average pub. That limits the opportunities for expansion in small market towns and the suburbs. New build outlets are unlikely, with the large number of vacant pub premises littering the suburbs. Large outlets allow Wetherspoon to cut prices for the customer, as they maintain lower overheads.

Expect to hear the latest wheeze from Tim Martin then, stating the business case for smaller neighbourhood pubs. The words “convenience” and “community” will be bandied about. I maintain that half the empty suburban pubs in the land could be made viable if Wetherspoons began to operate from them. A lot of them are quite large anyway. All day food, family friendly atmosphere and cheap beer. Furthermore, suburban pubs with a largely local customer base eliminates the need for a designated driver. Remind me again why people would bother to go into the town/city centre when they access the same facilities in their own neighbourhood?

Why can’t you get Black Sheep Best Bitter at Wetherspoons?

Black Sheep Best Bitter logo
The “flagsheep” beer. Sorry.

Black Sheep Best Bitter is the the flagship product of the Black Sheep Brewery of Masham, North Yorkshire. I live in the brewery’s heartland, and the product is sold in pretty much every pub here. Provenance is nothing new: many regions have a local beer that they love: Newcastle Brown Ale, Sharp’s Doom Bar in the South West, Deuchars IPA in Scotland, Bass and Pedigree in Staffordshire and Derbyshire. Black Sheep Best Bitter is ours.

How did Black Sheep become so ubiquitous? For one thing, it’s local, which always helps. It’s independent from a major corporation and is family owned: people like that aspect.

The product is really good: it’s deliciously hoppy, with a hint of demerara sugar and a crisp, dry finish that leaves you wanting another.

It has strong marketing that is quirky and ideosyncratic. It emphasises the rural nature of the product because sheep feature prominently in its advertising and through the brewery tour. It is respectful of tradition, yet modern and unfusty. Outside its home county, it has the “brand Yorkshire” behind it, which has connotations of quality, value, craft and tradition.

Black Sheep products such as Ale, Riggwelter and seasonal beers are available in bottles in your local supermarket. The Ale is also available in cans. But the flagship Best Bitter is never found in supermarkets. This is deliberate, to ensure that you can only find Best Bitter in the pub. That the product has not been subjected to commodification in this way makes it seem special and premium. Best Bitter has to be sought out, which raises its value in the eyes of the consumer. It makes business sense as well, as I’m sure there are higher profit margins from selling to pubs than to supermarkets. It means that pubs are able to compete against the might of the supermarket: they can offer an exclusive product. In that sense, it’s also a moral standpoint.

For the same reason, Black Sheep refuse to sell Best Bitter to the J D Wetherspoon value pub chain. In my local market town of Richmond, almost every pub sells Best Bitter, for around £3.10 a pint. If the local Wetherspoons stocked it they would be selling it for £2.29. Why would anyone pay more at one of the other pubs if Wetherspoons were selling it cheaper? This works in the pubs favour as they don’t have to compete with Wetherspoon prices directly. It also helps Black Sheep as they surely sell a lot more beer at higher margins if 8 pubs in town stock their beer, rather than one.

The only other major cask ale brewer in the county who don’t bottle or can their flagship beer is Theakston (if you class their higher selling Best Bitter as their flagship product, rather than the better known Old Peculier). Theakston are also located in Masham. It makes business sense to me. I wonder why other brewers don’t follow their lead.

The history of Dunkin’ Donuts in the UK

As Dunkin’ Donuts makes its third attempt on the UK market, I explore its previous attempts.

The broadsheets such as the Daily Telegraph report that this is the chain’s second attempt at the UK market, but this is incorrect.

The first outlet opened in the UK at Ludgate Circus, London on October 1965. The UK operation entered liquidation in 1968. At the time, the Economist described the attempt as a “flop”.

The second attempt began in 1988. Rather frivolously, its UK head office was at 48 Carnaby Street, London. Four outlets were opened in the Birmingham area, with a bakery at Leamington Spa. 6 DDs (including a 24 hour outlet in Glasgow) and a bakery in Livingston were opened in Scotland. As with now, the plan was to open 100 outlets, with a focus on the London area. The outlets and bakeries were all closed down in 1999, after continuously losing money.

When it failed the (second) time around, DD was actually owned by a British company, Allied Domecq, which has substantial knowledge of the UK property and catering markets, as the owner of J Lyons (including the Wimpy burger chain) and 3,500 pubs.

Clearly the present owner feels that the success of Krispy Kreme in the UK since has cleared the way for another doughnut retailer to enter the fray. The chairman and chief executive in America is also a Brit. But Krispy Kreme clearly presents itself as a premium priced “treat”, whereas the Dunkin’ Donuts model is more of a value proposition akin to Greggs. It’s foolhardy to take on an established competitor such as Greggs in its home market.

A history of TGI Friday’s in the UK

TGI Friday’s was the world’s first international casual dining chain.

In the mid 1980s, Whitbread trialled a number of new restaurant concepts. Quick, the Belgian fast food operator, was a brand that failed to take off. But Whitbread had a big success with Pizza Hut.

In 1986, Whitbread opened the first TGI Friday’s in the UK, in Birmingham. In 1987, it converted a former Wendy’s in Covent Garden, London. The site cost £1 million to build, and was an exact replica of the American model. Outlets were added in Fareham, Reading and Cardiff.292px-TGI_Fridays_logo.svg

Friday’s was founded in 1965 as a singles bar on the east side of Manhattan by Alan Stillman, a young perfume salesman. At the time, New York pubs and bars were aimed at men.

Stillman redecorated the bar to make it brighter, cleaner and more domestic, in order to make it more attractive to women. Daniel R. Scoggin was a customer who recognised the franchising potential of the restaurant, and instigated the roll-out of the chain across the US.

They were the first chain of themed casual dining restaurants. The flamboyant bartenders were the direct inspiration for the Tom Cruise movie Cocktail (1988), which was filmed in the original Friday’s.The restaurant claims to have invented loaded potato skins in 1974, and helped to popularise nachos. After a few years, the chain began to attract families, particularly during the daytime.

The chain was an instant success in the UK. Whitbread had insight into the mindset of the British public, and knew the local property market. By 1992, the Covent Garden site was the busiest TGI Friday’s in the world, and reputedly the busiest restaurant in Europe. In one week, its 260 seats yielded a turnover of £180,000.

By 1993 there were 12 sites, and the average annual turnover was £2.5 million. According to Sally Dibb and Lyndon Simkin, Friday’s altered the UK dining scene “beyond recognition” due to its vitality, enthusiasm and tight quality control standards. The company hired staff with extrovert personalities. The restaurants are essentially theatres. Friday’s was an early example of a company that tried to be “nice”.

The chain grew to 41 outlets by 2004. At this time, Whitbread indicated that it would divest the chain if profits failed to improve. Sales remained disappointing throughout 2005. In 2007, Whitbread sold the chain to the American parent company, Carlson, for £70.4 million. Whitbread felt that it had grown the chain as much as it could.

Wendy’s Hamburgers in the UK

Wendy’s is the third largest burger chain in the world, although the majority of its restaurants are in the US. It positions itself upmarket from McDonald’s and Burger King.

The first British outlet opened in London in 1980. For trademark reasons it was called Wendy, not Wendy’s. The operation was a joint venture between Wendy’s International and Grand Metropolitan, a large British hotels and brewing concern. An experienced local operator, Grand Met had already enjoyed great success with the Berni Inn casual dining chain in Britain. A flagship Wendy outlet was opened on Oxford Street. The idea was to target the over-25s market.

Grand Met exited the joint venture just a year after it entered it,  and Wendy’s International assumed full control of the British operations.

Wendy expanded to 16 restaurants. However, soaring rents at its central London sites left the company struggling to make a profit. The sites, all of which were located in London and the South East, were sold to Whitbread for £6.8 million in 1986. The majority of Wendy sites were converted to Quick, the Belgian fast food retailer.

Wendy’s returned for a second attempt at the UK market in 1992, with outlets at Shaftesbury Avenue and Oxford Street. Outlets were now known as “Wendy’s”, and featured salad bars. The company announced plans to expand to 70 sites across Britain. The initial expansion concentrated on London and West Yorkshire.

There were twelve restaurants by 1996, including eight company owned and four franchised. Wendy’s retreated from the British market for the second time in 2000. Some of its most prominent sites were taken over by McDonald’s, including Oxford Street, Shaftesbury Avenue, York Way near King’s Cross and Briggate in Leeds. Wendy’s blamed high property and operating costs for its failure in the British market.

The Fatty Arbuckle’s restaurant chain

Fatty Arbuckle’s was one of the largest casual dining chains in Britain during the 1990s.

The first Fatty Arbuckle’s was opened in Plymouth in 1983. The restaurant was co-owned by Pete Shotton and Bill Turner. Shotton had been a member of the Quarrymen alongside John Lennon.

The restaurant was modelled on American diners, and had a retro Hollywood theme. It was named after Roscoe “Fatty” Arbuckle, one of America’s most successful silent film actors in the 1910s. There was a focus on large portions (served on 13-inch plates).

A second restaurant was opened at Poole, Dorset in 1985. After Shotton and Turner met Adrian Lee and his wife, they offered them the job of running the Poole outlet. Within three years, Lee was managing director of Arbuckle’s.

Each new Arbuckle’s outlet proved an immediate success. Franchise outlets were opened from 1991, which allowed the chain to rapidly expand to 22 restaurants by 1995. There were 42 outlets by 1997, and Arbuckle’s was the largest American-style restaurant chain in the UK.

Arbuckle’s, with its focus on beefburgers and steaks, was hit hard when a BSE-epidemic struck Britain in 1996. 70 percent of its sales had been burgers. Pete Shotton sold his majority stake in the business to the turnaround experts, Alchemy Partners, for £5 million.

Arbuckle’s peaked with 58 restaurants by 1999. “Fatty” was dropped from the name in 2000-2001 in order to appeal to health-conscious diners.

After making heavy losses, the company entered receivership in July 2000, with debts of £6.8 million. A majority of the outlets had been heavily loss-making, and were immediately closed down.

The brand and ten outlets were acquired by the Noble House Group, headed by investor Robert Breare, for a rumoured £1 million. The ten outlets were closed down in 2006. Two former managers acquired the rights to the name and opened a revamped Arbuckle’s at Downham Market in Norfolk in 2008.

I visited the Fatty Arbuckle’s at Teesside Park around 1998. The restaurant was fairly tacky and greasy. I had a burger and the food was good enough, if unsophisticated. It was fairly pricey for what it was, but the portions were ridiculously generous.

This sort of thing.

The American style restaurant is still represented in Britain by TGI Friday’s, Frankie & Benny’s and Chiquito (Tex-Mex), but other American-style restaurant chains such as Henry J Bean’s and Old Orleans have closed down.