Luke Johnson, serial entrepreneur, successful restaurateur and chairman of Channel Four describes the opportunities offered by a downturn and his plans for Patisserie Valerie
The Guardian recently estimated Luke Johnson to be worth £100m and although this is somewhat short of the cost of Man City’s forward line, it certainly means he doesn’t have to work again. However, this serial entrepreneur is neither shy nor retiring anytime soon, and when I met him he was bullish about his restaurant business and determined to encourage other people to set up for themselves.
“If you’re experienced in the restaurant industry, but now want to be your own boss, it’s actually not such a bad time to strike out on your own,” he says, “property costs are lower than they were and there are a number of venues that are up for sale, which may offer an opportunity.
“There’s a great history of all sorts of businesses that started from low points,” he continues. “Bill Gates created Microsoft in 1975 out of a motel room in Alberquerque when America was battling the after-effects of the oil crisis. I got involved in Pizza Express in ’92 when we were still fighting a recession and I started Strada immediately after 9/11 when the mood was very gloomy.”
If you are a little sketchy on your restaurant history, Johnson became famous within the industry after taking control of Pizza Express in 1993, which he grew from 12 venues to more than 250, its share price rising from 40p to nearly 900p by the time he cashed out of the chain six years later. He then set up Signature Restaurants, a portfolio of eateries that included the Belgo chain and the headline hogging Ivy and Le Caprice. This was sold in 2005 and he went on to create the Italian restaurant chain Strada, an experience he enjoyed, but would not repeat.
“I wouldn’t start a business from scratch in that way again,” he says. “It’s incredibly hard work and the chances of failing are very high because most concepts just don’t take off. They have to evolve and that’s a painful process when you’ve got one or two units. However, I remain interested in being involved in smallish businesses that have potential; perhaps a chain of four or six outlets that is working well, but just needs capital.”
A case in point is one of his more recent acquisitions, Patisserie Valerie, which was operating in eight outlets when he took over three years ago and is now fast approaching 30.
“I aim to open a further 10 next year,” he says “We’ve been learning what works and getting better at choosing sites.” Johnson is clearly a genuine fan of the indulgent cakes and patisserie concept. “Patisserie Valerie has been around since the 1920s and it’s a classic. People are very affectionate towards it, which is really valuable,” he says enthusiastically. “In the restaurant world, brands can quickly come and go and a lot of public goodwill is lost with them. I am very ambitious about this business, if you look at mainland Europe there are countless examples of the café and patisserie establishment and that’s what we offer.
“These are tough, competitive times and I think people want a proposition of genuine quality that is affordable,” he argues, “our average ticket is quite a modest indulgence compared to the expense account £50-plus per meal restaurant segment, which is under some degree of pressure.”
Although a clearly successful restaurateur, Johnson is not without his critics who see him as a controlling businessman rather than a passionate foodie. Restaurant guide Harden’s responded to his recent takeover of London artisan bakery Baker & Spice by commentating: “It is difficult to believe that this particular beacon will continue to shine as brightly in future”. Johnson is unfazed.
“Well, everybody is entitled to their opinion,” he says smiling. “I take comfort from the view that I have been heavily involved and principle owner of businesses that have become established and successful. If you buy or inherit a business with a particular image and offering, then it’s crucial not to lower the standards, and I have stressed that throughout the operation of Patisserie Valerie and Baker and Spice. For example, we serve Illy coffee because we think it’s the best, despite it being, to us as the purchaser, the most expensive.”
Criticisms of being an ‘outsider’ have also been levelled at him in his high-profile role of chairman of Channel Four.
“In the world of television there is a lot of snobbery about whether you are part of the creative community. Questions such as ‘Have you made programmes?’ and ‘Are you just a suit?’ arise and there is some of that sort of attitude in the restaurant business too.”
Like television industry commentators who do not understand the economics of the medium, Johnson is not convinced restaurant critics comprehend the business realities of running a food and drink venue.
“They may or may not understand food, but their ignorance of the underlying economic reality of the restaurant business is profound. It’s vital that you balance what you think is worthwhile doing with what makes financial sense. If you run a business at a loss then eventually you will go broke and everyone’s out of work and it’s just a huge waste of time,” he says. And it’s this basic understanding of finance that Johnson encourages aspiring restaurateurs to embrace.
“The restaurant industry suffers a lot of failures because amateurs get involved and it’s not so much that those people are serving terrible meals, it’s that they don’t know how to read a profit or loss sheet,” he contends. “If you have experience of eateries, but are not so familiar with accounts you need to find somebody who does — ideally as a partner or co-owner. Plus, there are many boring administrative matters that I think a lot of entrepreneurs pass by — essential details such as health and safety legislation and employment law, so if you don’t have the appetite for this type of drudgery then work with somebody who does.”
Johnson thinks practically everyone has the ability to set up a business and believes budding entrepreneurs should be supported because the creation of small businesses will be a key element in dragging ourselves out of recession. But if you think this sharp operator will take it easy on any new eatery competing against his venues, then you had better wake up and smell the Illy.