UK: My best deal - The business rejuvenator - MICHAEL GUTHRIE.

UK: My best deal - The business rejuvenator - MICHAEL GUTHRIE. - Michael Guthrie looks for businesses the seller no longer believes in and turns them round. Holiday camps have pleased him most.

by Chris Blackhurst.
Last Updated: 31 Aug 2010

Michael Guthrie looks for businesses the seller no longer believes in and turns them round. Holiday camps have pleased him most.

Two years ago, Michael Guthrie's career seemed finished. Guthrie, the 49-year-old chairman of Mecca Leisure, the bingo hall and casino operator, had been rushed to hospital for emergency heart surgery. The timing, at the height of a bid for Mecca by Rank, could not have been worse. The Mecca board capitulated and recommended acceptance of Rank's offer. Shortly afterwards, Guthrie resigned. For the architect of Mecca's buy-out from Grand Metropolitan in 1985, it was a shattering blow. In just a few years he had overseen its rise to become one of the country's biggest leisure groups. An audacious takeover of Pleasurama, three times Mecca's size, in 1988, won him a strong City following. But, recession and interest rates shortly began to bite. Gamblers stayed away and Mecca's debt suddenly looked high. Guthrie's plans to sell off businesses to raise cash did not materialise. Rank struck, he fell ill and that was that. Thanks to a strict regime of five tablets a day and an indomitable spirit, he has bounced back.

Within months of leaving Mecca, he formed a company - Brightreasons - and bought the Pizzaland and Pastificio restaurant chains from Grand Metropolitan for £20 million. Last December, he paid £90 million for Rank's motorway service stations. Sitting in the Savoy Hotel, after announcing a £20-million face-lift for the service stations and their launch under the Pavilion banner, he says his aim, "is to do for motorway catering what Lord King and Richard Branson have achieved for standards in the airline world". He conducted market research among 3,000 people as to what they would like to see on the motorway. As a result, he claims, Pavilion will do away with the traditional image of the service stations of poor quality food at high quality prices.

The service station purchase was one of several deals where he bought something the seller no longer believed in. "I suppose I am a specialist in buying tired businesses and turning them around. I can recognise where something is tired and all it needs is a good, aggressive, hands-on approach to turn it around." He attributes his need to carry on working, after being ordered to take things easy by the doctor, to his background. His parents died when he was young. "I was not left a penny. I had to fend for myself. It is not a virtue but it sure makes you hungry." He attended catering college in Blackpool, in his native Lancashire, and spent his summer holidays working at the resort, which "first gave me confidence in serving a mass market". After leaving college, where he says his peers regarded him as "persuasive, a bit cheeky and highly ambitious", he joined Mecca as an £8-a-week management trainee. After 20 years of relentless climbing he reached his goal, in 1981: chairman and chief executive. It was then, he claims, that he made his best deal. Sir Allen Sheppard, head of Grand Metropolitan, Mecca's owner, asked him to take the loss-making Warner holidays business under his wing. Warner had two main activities: holiday camps and package tours. Only package tours, said the strategists of Grand Metropolitan, had a future. Holiday camps were a throwback to a different era. Guthrie was advised to scrap the holiday camps and concentrate on package tours. Typically, he thought the camps a tired business that could be saved. He transformed the camps, improving catering, upgrading living accommodation and installing better sports and games facilities.

"Everyone thought we were quite mad. But within 18 months the business was turned round and making a profit." The camps have since been sold to Rank and are going strong. He displayed the same touch when he bought Mecca from Grand Metropolitan. "Bingo was regarded as jaded and tired but it was there to be marketed. It was never on its uppers; it was just not perceived as fashionable." Guthrie introduced some razzmatazz, bought in big money prizes and arrested the decline.

He is trying to repeat the trick with service stations. "I love the challenge of taking on a business and giving it that added ingredient," he says, smiling. "I want people to come to our Pavilion service areas, enjoy themselves and drop in again the next time, and the next time ..." If he succeeds, he will have done us all a favour - whether his doctor would approve, is a different matter.

Chris Blackhurst writes on business for the Independent on Sunday.

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