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To anyone who has lived in Britain for more than thirty years the name of Lyons is instantly recognisable. The fame of J. Lyons & Co. rested principally on its chain of high street cafés known as the Lyons teashops. Before the outbreak of the Second World War there were more than two hundred and fifty of them throughout the country, with the densest concentration in London. Oxford Street alone had six, while the closely packed streets of the City of London, the financial heart of the capital, revealed another teashop at almost every turning. They spread through the suburbs from Camberwell to Wembley; from Plymouth to Newcastle, provincial cities each had their own.

At its peak the Lyons empire also included grander restaurants and hotels in London and other big cities, including the legendary Lyons Corner Houses and the Trocadero; a food manufacturing and distribution business that not only supplied the teashops and restaurants but also delivered Red and Green Label Tea, Kup Kakes and Lyons Maid ice cream to grocers’ shops the length and breadth of the country; and a catering service for large-scale events including Masonic dinners, Buckingham Palace garden parties, the Chelsea Flower Show and the Wimbledon tennis championships.

How did a firm founded on gratifying English tastes for tea and bland, comforting food become a high-tech pioneer? Behind the Lyons shopfronts with their pyramids of iced fancies lay a manufacturing and distribution empire launched with immense commercial vitality. The Lyons of the early twentieth century was a young, progressive company, eager to adopt new methods in both manufacturing and management. The company was founded just as a wave of social and technological change was beginning to transform the world of business; for the first fify years of its existence, Lyons was riding the crest of that wave.

J. Lyons & Co. had its origins in a family tobacco business established in London by Samuel Gluckstein, whose father Lehmann Meyer Gluckstein had brought him and his seven siblings from their native Prussia to settle in London in 1841. Jewish immigration to Britain from continental Europe in the mid-nineteenth century stemmed from the discriminatory practices of a number of trade and craft guilds, which effectively excluded Jewish citizens from many profitable areas of work. German and Dutch Jews settled predominantly in the narrow, crowded streets of Spitalfields in East London, and it was here that Samuel Gluckstein first lodged with his aunt Julia Joseph. Samuel and his younger brother Henry started a small tobacco business in Leman Street, Whitechapel, in 1864 with their cousin Lawrence Abrahams, employing skilled local people to make cigars and cigarettes by hand. But the partners fell out among themselves and the company had to be dissolved in 1870.

A few years after arriving in London Samuel married his cousin Hannah Joseph, and by the 1870s they had ten surviving children. In 1872 Samuel started a new, small-scale cigar-making business in Whitechapel Road, in partnership with his sons Isidore and Montague and another tobacco trader, Barnett Salmon, who had married Samuel’s daughter Helena. Almost immediately their fifty-four-year-old father’s unexpected death from diabetes left the young men with responsibility for the welfare of a large extended family.

Still shocked at their bereavement, the three remaining directors met to decide how to proceed. Mindful of the feud that had destroyed Samuel’s first company, they shook hands on an extraordinary agreement. Adopting the motto L’union fait la force (strength in union), they placed the assets of the new company, Salmon & Gluckstein, in a family fund in which each of the sons and sons-in-law of Samuel Gluckstein had an equal share. While individual family members undoubtedly had greater or lesser influence in the years to come, the philosophy of collective family ownership and collective family decision-making proved extraordinarily durable. The family continued to hold its property in common until the early 1990s, sharing all the proceeds of the business equally and owning houses and even cars communally rather than individually. Pushed to think of an exception, a surviving family member says that he supposes he might have been allowed to keep his winnings if he had a lucky bet on the horses.

From small beginnings the company grew rapidly. To increase its profitability in the highly competitive cigar-making market, the directors opened a retail tobacconist’s shop in Edgware Road shortly after the company’s foundation. By 1894 there were thirty Salmon & Gluckstein shops throughout London. Three years later there were double this number, and by the end of the century it was the world’s largest chain of tobacconists with 140 shops.

The shops sold Salmon & Gluckstein’s own products – such as ‘Raspberry Buds’ and ‘Snake Charmer’ cigarettes – as well as cigars and cigarettes from other manufacturers. With Boots the Chemists, the stationers W. H. Smith and Barratt’s Shoes, the company was among the first in Britain to recognise that selling through multiple outlets gave it the bargaining power to drive down wholesale prices, and hence to inspire consumer loyalty by passing on savings to enthusiastic customers. It sold its products at aggressively competitive prices, leading to frequent protests from small, independent tobacconists who could not command such large discounts from suppliers. Salmon & Gluckstein also made extensive use of advertising (‘The more you smoke, the more you save!’) and of gimmicks such as cigarette cards, now collectors’ items, that could be saved up and exchanged for gifts. Their business methods occasionally verged on the unscrupulous: on one occasion they were successfully sued for continuing to label their cigarettes ‘handmade’ after they had introduced automatic cigarette-rolling machines. But while their competitiveness provoked indignation among their rivals, their success could only earn grudging admiration.

By the end of the nineteenth century the tobacco business in the United Kingdom was under threat from the United States. ‘Buck’ Duke, the uncrowned king of the American tobacco industry, had used factory automation, national advertising, price-cutting and takeovers to give his American Tobacco Company a virtual monopoly on the booming cigarette market in the United States. In 1901 he bought a British company, Ogden, and seemed set to wipe out all British competition in the same way. In some respects the situation mirrored the predicament of the British computer manufacturers sixty years later, and the tobacco industry adopted the same solution. In December 1901, thirteen of the biggest British companies, led by W. D. & H. O. Wills, merged to form Imperial Tobacco Ltd. In 1902 American Tobacco and Imperial Tobacco agreed not to compete in each other’s home territories, and formed a joint company, British American Tobacco, to market all their products overseas.

Salmon & Gluckstein had held on to their independence in 1901. But a year later they sold a controlling interest in their greatest asset, the Salmon & Gluckstein chain of retail tobacconists, to Imperial Tobacco. By that time, however, tobacco had ceased to be the main business interest of the Salmon and Gluckstein family.

Montague Gluckstein, though younger than his brother Isidore, was the driving force of the business and spent much of his time on the road promoting the company’s products at trade fairs and exhibitions around the country. Entrepreneur that he was, he used the time to think about new business opportunities. He told his story to the author William H. Beable, whose Romance of Great Businesses was published in 1926: ‘Any man moving about the country can, if he cares, pick up useful information upon the needs of the public, and he can then try to plan a way to meet them.’ It was Montague’s experience at exhibitions that ‘first brought home to me the dreary and standstill methods’ of the catering establishments he was forced to patronise.

The Great Exhibition of 1851, which took place in the Crystal Palace in Hyde Park, was the forerunner of a series of similar events mounted by major cities in the years that followed. They combined popular entertainment with the opportunity for businesses at home and overseas to promote their wares. They were the Millennium Domes of their day: the difference being only that they were hugely popular and successful. The Manchester Exhibition of 1887, for example, attracted five million visitors. But as he queued for an indifferent and expensive cup of tea, or ventured in search of a pie or a sausage in a neighbouring pub, the fastidious Montague Gluckstein reflected that as far as refreshments were concerned the exhibitions catered very poorly for their visitors, especially women and families. ‘The ordinary man visiting a strange town and wanting a meal had a choice between a public-house, where he would get cold meat, pickles and beer, or a coffee-house, with its dirty little horse-box-like compartments, untidy shirt-sleeved waiters, grimy tablecloths, bad food and worse smells,’ wrote Thomas Charles Bridges, describing Montague Gluckstein’s experience in his 1928 book Kings of Commerce.

Surely, thought Gluckstein, there was money to be made from offering people at least a good cup of tea when they were away from home? When, in the mid-1880s, he proposed to his brother and brother-in-law that they diversify into catering, they were slow to agree. They were concerned about the risks involved in a new area of business, one which, as Montague Gluckstein himself put it, was seen as ‘hardly the thing for people engaged in the aristocratic business of cigar manufacturing’. Eventually they concurred, as long as the catering venture was screened behind a different trading name.

The compromise was to find a partner to run the new venture who was almost family, but not quite. Joseph Lyons, an entrepreneur and salesman, was a distant relative of Rose Cohen, the wife of Isidore Gluckstein. Born in Southwark in 1847, Joseph Nathaniel Lyons had begun his working life as an optician’s apprentice, but his quick imagination and gift for selling had led him into a colourful assortment of other occupations. He invented a device called a chromatic stereoscope – a combination of telescope, microscope, magnifying glass and binoculars – and sold it for 1s 6d (7½p). He wrote detective stories, music hall sketches and songs, and was a moderately successful watercolourist. He was married to Psyche Cohen, the daughter of an entertainer who later ran the Pavilion Theatre in Whitechapel; his marriage certificate gave his occupation as ‘artist’.

Once the brothers had agreed that Lyons was their man, Montague Gluckstein went to meet him. At the time he was running a stall, probably selling his own artistic or technological creations, at the 1886 exhibition in Liverpool. ‘I went there for a night, that stall was closed down, and the terms of our arrangement I put on an ordinary sheet of notepaper,’ recalled Gluckstein. The deal they struck was that they would go into the catering business together as long as Joe Lyons could win the catering contract for a large exhibition taking place in Newcastle in 1887 to mark the Golden Jubilee of Queen Victoria.

Joe Lyons had no previous catering experience, and none of managing a business larger than a market stall. But he was cheerful, ebullient and persuasive, and he had the resources of a highly respected firm behind him. He won the contract, and he and his partners discovered, just as Gluckstein had supposed, that there was a vast, untapped market for the combination of style and good value that they felt they could offer. There was nothing tentative about the first venture into catering by J. Lyons & Co., the name adopted for the new company in 1887. Customers in the tea pavilion at the Newcastle exhibition were entertained by a Hungarian string band, they could choose from a varied menu and enjoy attentive service, and of course, they could wash their meals down with a pot of excellent tea for threepence (1¼p). ‘Out of that humble but very important trio, tea, bread and butter of the best kind sold at a reasonable price,’ reflected Gluckstein later, ‘the foundation was laid of what was afterwards to be the largest catering business in the world.’

Catering on a huge scale for exhibitions and similar temporary events was to remain an important part of the company’s activities for the rest of its existence, but the Lyons directors did not stop there. In 1891 Joseph Lyons raised the capital to mount a spectacular entertainment called ‘Venice in London’, complete with Italian gondolas on water-filled canals, at the Olympia exhibition hall in West London. The show ran for more than a year, and others followed. At the same time J. Lyons & Co. won the contract to provide all the catering at Olympia, a contract they held until 1978. The association with Olympia was a factor in uprooting the family firm from its East London origins. First, Montague Gluckstein moved from his flat above a tobacconist’s to a house in Kensington, next to Olympia. Then in 1894, the year J. Lyons & Co. was formally registered as a limited company, it moved its headquarters from Whitechapel to Cadby Hall, a former piano showroom and factory in Hammersmith Road, near to Olympia. Following the earlier model of the tobacco business, the company began to manufacture the products needed to supply its catering enterprises, beginning with bread and rolls from the Cadby Hall bakery. Within twenty-five years the site held a complex of red-brick factory buildings, erected fortress-like around a central yard; thousands of workers were employed on the site.

A retail chain to match demand to supply seemed an obvious next step. In the last years of the nineteenth century, ever-increasing numbers of clerical workers were commuting into central London from the suburbs to work, and they needed somewhere to buy their lunch. There were pubs, sausage and pie shops and coffee houses, and the chain of ABC restaurants run by the Aerated Bread Company. But these places, often known as ‘slap-bangs’ for the style of service they offered, had a somewhat sleazy reputation, and none was designed to appeal to the increasingly female workforce. The Lyons directors saw a gap in the market, and resolved to open a chain of establishments offering ‘good temperance fare at economic prices in attractive surroundings and with polite and dignified service’.

With the opening of the first Lyons teashop at 213 Piccadilly in 1894, Joseph Lyons and his partners set standards of service to customers and sumptuousness of surroundings that astonished and delighted their clientele. Between the drab shopfronts of late Victorian London, the name of J. Lyons & Co. shone out in hand-carved art nouveau lettering, ornamented with floral swags and finished in real gold leaf against a white background. Inside there were gas chandeliers, red damask wallcoverings, elegant chairs and marble-topped tables, silver-plated teapots and fine china. Highly trained waitresses, originally known by the name ‘Gladys’ but later christened ‘Nippies’ (a shrewd PR move) for their speedy efficiency, eagerly waited to take the orders in made-to-measure uniforms with starched white aprons. The tea, of course, was delicious, and only twopence (1p) a cup. It was an instant success, with queues of customers patiently waiting outside on benches thoughtfully provided by the management. Within a year the capacity of the teashop had to be increased to cater for 400 rather than 200 customers at a time.

The model was repeated over and over again. Two more teashops, in Queen Victoria Street and Chancery Lane, opened in 1894, another dozen the following year; there were 37 by the end of the century and 200 by 1925 on prime sites in London alone. The provincial expansion began in 1909, when Lyons bought the Ceylon Café chain; within a few years cafés in Bradford, Manchester, Sheffield, Leeds and Liverpool had been converted into Lyons teashops.

The identical white-and-gold fascias became as much a part of London life as double-decker buses or underground trains. At Montague Gluckstein’s insistence, the prices were the same whether a teashop was located among the department stores of the West End or the tailors’ shops of the East End – another innovation for the time. Whether or not they drove the dramatic social changes that followed the First World War, they certainly reflected them. Writing in the Daily Mail in October 1921, and quoted by Peter Bird in his history of the company, Lady Angela Forbes observed: ‘For the business girl, not only in the city but in every part of London, the nearest teashop is not far away … They share a table with men as naturally as they take a seat – or a strap – in tram and tube … From every point of view, and most emphatically from a woman’s, London has changed for the better during the past 25 years, in that metamorphosis the teashops have played a meritorious part.’

Working on an even grander scale, the company simultaneously launched a number of larger and more up-market establishments, notably the Trocadero at Piccadilly Circus (1896), a palatial restaurant in the heart of London’s theatre district, and the Lyons Corner Houses. The first Corner House opened in Coventry Street in London’s West End in 1909, and was capable of serving 5,000 people at a time. There were restaurants catering to different tastes and budgets on the four upper floors, each with its own live band. (By the mid-1920s, Lyons had a budget of £150,000 a year for music alone – over £5 million in today’s terms.) There was a food hall on the ground floor, selling tea, coffee and high-quality cakes and biscuits. You could even get your hair done, book theatre tickets or avail yourself of that novel instrument, the telephone.

Two more Corner Houses had opened in London by the mid-1930s, in Oxford Street and the Strand, as well as Maison Lyons at Marble Arch. They quickly achieved landmark status. ‘In these places,’ noted Montague Gluckstein with satisfaction, ‘people made the astonishing discovery that beauty and luxury in eating were not the prerogative solely of the very rich, and the man of modest income and his wife could realise something of the spirit of refinement and thoughtful service which actuates the very best and most exclusive restaurants of this and other European countries.’

By the end of the 1930s Lyons had a total workforce of well over 30,000, making it one of the largest businesses in the country. Although its teashops and restaurants were the most visible part of the operation, food manufacturing occupied around two-thirds of its staff. As the number of outlets to be supplied grew, so did the Cadby Hall site and the range of products that Lyons made. After bread came tea, cakes, ice cream, confectionery and eventually ready frozen meals. The food production areas were highly mechanised: the Lyons continuous Swiss roll plant, which took in raw ingredients at one end and delivered filled, rolled, wrapped and packaged cakes at the other, was only one of a number of specialist bakeries working day and night. In addition to its own restaurants and teashops, the company supplied almost every grocer’s in the land with Red and Green Label Tea packed by the quarter pound, foil-wrapped Kup Kakes and Lyons Maid ice cream. In London it also delivered to private customers, its blue, white and gold liveried vans even drawing up at Buckingham Palace.

In its unrelenting quest for quality, the company gradually brought many of the services it needed to run the business under its own control. The strong tradition of family ownership translated into a philosophy of self-reliance that pervaded every aspect of the company’s operations. It developed its own printing and packaging, laundry and dressmaking, and transport and vehicle maintenance operations, and bought a tea plantation in Nyasaland (now Malawi). The attention to detail that had gone into the design of the teashops remained a feature of all these activities. The new uniforms for the Nippies, designed in 1925, which were still made to measure for each waitress, followed fashion by featuring a shorter skirt, and were trimmed with no fewer than 30 pairs of pearl buttons. The tea leaves that ended up in a packet of Lyons Red Label were carefully blended from stocks either bought at auction in Mincing Lane, the centre of London’s tea trade, or imported direct from producers. Soft drinks for the restaurants were precisely graded, those for the Corner Houses containing little preservative and having a three-day shelf-life, while those for the teashops contained more preservative and could be kept for six weeks.

Despite its size, Lyons remained very much a family business. After Joe Lyons’s death in 1917 Montague Gluckstein succeeded him as chairman, and thereafter the board consisted almost exclusively of Salmons and Glucksteins, fathers and sons, uncles and nephews. They tended to have large families, and there were many marriages between cousins so that the network of blood relationships was very close. The exception was the company secretary, George William Booth, who joined the company in 1891 and caused consternation in the early 1950s when he suggested he might retire – at the age of over eighty. ‘He wasn’t family,’ says Anthony Salmon, former Lyons board member and grandson of Montague Gluckstein, ‘but the family would never move without consulting him. He acted as a public conscience.’

It was Booth who recognised that concern for quality and value, and a fine sense of what the customer wanted, were not always enough to ensure profitability. The problem Lyons faced was simple to express, much harder to solve. A typical teashop customer bought no more than a bun and a cup of tea, costing a few pence. The profit to the company on that transaction might be as little as a farthing (barely a tenth of a penny in today’s decimal currency, and even allowing for inflation worth only about 4p). Although the scale of the operation – 150 million meals sold per year – meant that overall turnover was high, the modest profit margin on each purchase could easily be wiped out if the clerical work involved in recording and analysing all those transactions was inefficient. And since almost everything Lyons sold had a limited shelf-life, it was essential to have an ordering and distribution system that accurately matched supply to demand.

The same applied to the retail business: Lyons supplied goods such as tea and cakes directly to small shops, with no wholesaler involved, dealing with 30,000–40,000 orders worth a few pounds each in a week. Meanwhile, the efforts of the armies of clerks culminated in little more than simple profit and loss accounts – the concept of management accounting was then still in its infancy. That the business remained comfortably in profit during the 1920s and 1930s owed more to Montague Gluckstein’s instinct for what would sell than to any detailed analysis of the company’s performance.

Booth saw that success in the long term would depend on a more systematic approach. In adopting this view he showed himself to be in tune with the most advanced ideas on scientific management that were then beginning to circulate on both sides of the Atlantic.