Retail Species – The serial entrepreneur – Luke Johnson
The Person: Luke Johnson
The Company: Too many to mention but Pizza Express if you insist we name one of his ventures
The Job Title: Serial retail entrepreneur
So there’s young Luke Johnson all set up to be a doctor, studying medicine at Oxford, a steady profession if ever there was one and he gives it all up? Correct. He found the excitement of business too attractive, didn’t fancy ten years of study and switched to another (shorter) science course. Allegedly it was Richard Branson who turned him on to business after he interviewed him for a student magazine. And as Mr Johnson himself says entrepreneurship is the most fun you can have with your clothes on.
Well I wouldn’t like to say I’m sure… Anyway, he couldn’t wait to get at it. But first he did a stint as a media analyst which no doubt proved useful in his recent chairmanship of Channel Four. And ever since then the word ‘polymath’ has really not done him justice.
I really feel the need to talk about doughballs? Indeed, they are very important. As he says the Pizza Express deal made his career and even if it did not make him the most money of any of his deals it transformed his profile and gave him confidence. He took a chain with 12 outlets in 1993 and increased it to over 250. The share price went through the roof and he sold it in 1999. But by then he had his sights set on some of the crown jewels of the restaurant world.
Strada? No, cheeky. Although obviously he did start that chain too . I meant The Ivy. Johnson recalls how people would try to become his friend just to get a table.
And would he?Don’t be daft. His thought it was ‘pathetic’ but concedes that at its peak it was unique in the restaurant world with more power brokers and celebrities in one room than you could shake a stick at. He thinks it’s doing ok now but the glory days are gone. ‘It’s more competitive at that end now’ and there are no regrets about selling it in 2005. According to Johnson ‘Corbin and King took the best staff with them anyway.’
So what’s more interesting the one offs or building the chain? He reckons branded chains make more money but for a £30 a head occasion would rather head off to an independent. ‘There are good food chains – mostly mine’ but the difficulty lies in keeping up consistent standards when the owner is absent. The beauty of restaurants like Strada and Pizza Express is that they provide a minimum level of quality that is the same everywhere. Same for Patisserie Valerie.
Ah yes, bread and cakes. I feel a trend coming on. Johnson likes bakeries although he claims not to be systematically investing in them and to do no customer surveys or focus groups on them. He has lots in his portfolio though including the Gails chain and Patisserie Valerie and thinks that what makes them distinctive is the vertical integration whereby they produce all that they sell.
And is that a trend? Don’t get him to try and predict. A gut feel through experience maybe but he thinks it is ‘phoney’ to say investing is any more scientific than that. In fact he wishes he was clever enough to see trends coming – it’s all so much clearer with hindsight.
And what does hindsight tell him about his own retail career? That launching the Belgo chain in NY ‘did his brains in’ and lost loads of cash. And also that buying Borders Books was a bad call as it was ‘headed for the graveyard’. Actually the retail graveyard might be a crowded place according to Johnson. Borders failed partly because of the competition from eBooks, Amazon and supermarkets. He cites video rentals, greeting cards, games and travel agents as more possible victims. The future is online and multi channel only.
What! No more shops! Not quite. But Johnson thinks the UK is over supplied with shops. In years to come he reckons bricks and mortar will be showrooms while the real business of buying and selling will be online. If he was starting out now that is what he would get into. Or he might buy Tesco.
Crikey, does anyone know yet? Calm down, he’s not really going to do it. But he finds it effective and clever although aspects of it irritate like the world domination and blandness. For a retail behemoth it is quite quick moving and ‘you’ve got to be envious of its power and resources.’
Hmm, not sure even Risk Capital Partners has got that much money. What else is interesting? He is liking the Draft House (a craft beer and British food chain) and has invested. Johnson thinks it links directly into the renaissance of food and drink with provenance – coffee and chocolate being two other examples. ‘Customers like the story’ he says. And then there’s his liking for raw fish.
You’ve lost me: Feng Sushi – he bought a majority holding in it in 2010, just after doing the same at Ego Group. He’s got fingers in so many pies it’s not true but there’s just something about selling us food which hooks him in time and again. Partly this is the deal flow he gets because people know he has done business here before. But he says that food is a high gross margin business, more competitive than most’ and that might just be what he likes best.
Ah, the thrill of the chase? He certainly thinks the world is a lot more competitive now. Profits have been affected by all sorts of things including the minimum wage and rents. The customers are more demanding, there is better management around and bloomingtechnology to deal with too. But despite all this…
Let me guess. Still better than wielding a stethoscope all day: Definitely.