Part I, about the early history of J Lyons, can be found here.
During the post-war period, J Lyons developed the first business computer in the world. It introduced household-name brands such as Ready Brek, Maryland Cookies and Wimpy Hamburger.
Growth and continued success of J Lyons
J Lyons was the largest catering company in the world, with a capital of £10 million and exports to fifty countries. There were 33,000 employees and 230 tea shops in 1954.
The Corner House restaurants and hotels alone employed over 4,000 workers in 1951. On normal Bank Holidays the Corner Houses could expect to serve 250,000 meals.
Lyons was a global leader in sales of packaged tea. Lyons had a weekly production of seven million buns, 1.25 million lbs of bread and 12.5 million pieces of confectionery.
Clerical work became so extensive that J Lyons determined to build the first business computer in the world. Based on a computer at Harvard University, Lyons engineers introduced LEO (Lyons Electronic Office), after six years of development in 1954. Large computers had previously only been used for military or scientific purposes. The 5,000 sq ft computer could perform the work of 300 clerks working at top speed, with fewer mistakes.
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. There were 1,100 Wimpy outlets in 34 countries by 1973.
Lyons Pure Ground Coffee was the highest selling coffee in Britain in 1953. Lyons launched its standard market teabag brand, Quick Brew, in 1955.
A “Big Four” held 70 percent of the British tea market by 1956. Lyons held second place behind Brooke Bond.
Maryland Cookies were introduced from 1956. The company launched Ready Brek instant porridge in 1957, to outstanding success.
J Lyons was the third-largest soft drink producer in Britain by 1960. Rose Kia-Ora, a joint venture with Schweppes, held nearly half of the squash market.
Lyons sold its confectionery subsidiary to Callard & Bowser in 1961. With the growth of television advertising, middle-size sweet manufacturers were forced to consolidate in order to reach a scale capable of launching their own campaigns.
Lyons retired most of its tea distribution vans from 1962. 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 at the expense of Lyons.
Lyons acquired Eldorado of Liverpool, the fourth largest ice cream manufacturer in Britain, in 1963, 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.
Lyons had become the biggest supplier of pre-packaged cakes in Britain by 1966, and was the clear market leader with a 28 percent market share.
Lyons held more than two thirds of the packaged ground coffee market in 1966.
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.
Lyons was probably the largest business in catering sales and supplies in Britain by 1969.
Lyons enters into decline
Lyons had seen its market share in tea decline to 13 percent by 1970, and it was far from the brand leader it once was. Quick Brew had an eight 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.
Lyons hotels held over 6,000 beds in 1970.
It was argued in The Spectator in 1968 that “You can grade the Lyons properties into four classes — redundant, non-profitable, underdeveloped — and Cadby Hall [the production centre].” The number of tea rooms had declined to 120 by 1969, and many were loss-making. The Coventry Street Corner House was closed in 1970. Between 1970 and 1972 the remaining 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.
Lyons acquired Tetley Tea for £23 million in 1972. 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.
A 25 percent stake in Fox’s Biscuits of Batley was acquired in 1972.
Baskin Robbins, the ice cream manufacturer with 1,600 stores in America, was acquired for £16 million in 1973.
Lyons encountered financial difficulties following the global oil crisis of 1973. They had borrowed £250 million to finance acquisitions in the early 1970s, 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 its liabilities.
J Lyons dropped from the top 100 companies in Britain by market capitalization in 1974. The company had a capitalization of £39.5 million and a turnover of £249 million in 1975.
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.
The 35 British hotels (with the exception of Tower Hotel) were sold to Forte’s Trust House Forte for £27.6 million, or just £4,000 per room, in 1976. Forte was transformed from the largest hotel operator in Britain, to probably the largest in the world. Forte promptly recouped £11 million in a year by cutting costs. The Economist described the deal as “phenomenally successful” for Forte, who acquired the hotels at a “knock-down price”.
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 in 1976. By allowing ordinary shareholders to have votes, they hoped to acquire more capital, which was desperately needed. Previously the families had held six to seven 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.
Lyons is acquired by Allied Breweries, and the businesses are divested
Lyons was subject to a friendly takeover by Allied Breweries which valued the company at £64 million in 1978. The merged entity was known as Allied Lyons. The Cadby Hall sites were demolished in 1983.
The remnant 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 to Clarke Foods for £12 million in 1991. There were 800 employees in Greenford, Middlesex and Liverpool. Clarke Foods was acquired by Nestle in 1992.
In 1994 the Lyons coffee businesses were divested: ground coffee to Paulig of Finland and instant coffee to Philip Morris.
After acquiring Pedro Domecq in 1994, Allied Lyons renamed itself to Allied Domecq.
Lyons biscuits of Blackpool, with a staff of 780, was sold to Hillsdown Holdings in 1994.
Lyons Cakes was sold to Tomkins of America for £35 million in 1995. 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 and Red Label teas were still available in Britain until relatively recently. Lyons remains the highest-selling tea brand in Ireland, with over a third of the market. Lyons Maid ice cream has been rebranded 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.