If you live in London and haven’t been to Little Bay, you probably will before long. There are four branches across the capital, well-known for the quality of their food and service, their offbeat bohemian décor, and most of all, their refreshingly low prices.

They’re even better known for a publicity stunt their owner, Peter Ilic, pulled off in February this year. Ilic launched a promotion in the Farringdon branch of the restaurant inviting customers to pay what they thought the food was worth – anything from a penny upwards. Well-timed to coincide with a particularly low ebb in economic confidence, the idea attracted journalists from across the globe, and Ilic was covered extensively in print and on TV. The restaurant’s takings hardly suffered – as those choosing to pay over the odds made up for the skinflints – but the publicity obtained was priceless.

The media attention doesn’t seem to have gone to Ilic’s head. He doesn’t try to create an aura of mystery around his success, or proffer grandiose statements about how to run a business. When I ask him how he went about creating Little Bay’s distinctive look and atmosphere, he almost shrugs off the question.

‘Atmosphere is very important… but it is created by the crowd,’ he states. ‘If you are full with lots of customers, the atmosphere is there. Many people think the staff are creating the atmosphere. If the place is full, the staff can help – otherwise, it won’t happen.’

The key to having lots of customers is offering value for money – and this is the one area where Ilic allows himself a hint of self-congratulation. ‘I believe Little Bay is one of the best [restaurants] for value for money,’ he says, adding, ‘I would give people anything free to have the restaurant full.’

When I reiterate the question about the inspiration behind Little Bay, he gives a simple answer. ‘I believe that if I like something, a customer will like it. I believe I’m an average customer.’

From Communism to commis chef

Ilic came to England in the mid-1970s, intending to learn the language then return to Yugoslavia to get a job in the hotel trade.

‘I had learned about capitalism in school, but when I came to England, I found it was totally different,’ he recalls. ‘After three days, I knew I wanted to stay here. I wanted to be my own boss.’

Starting out as a junior chef at Claridges, Ilic was always looking for opportunities to realise his dream of running his own restaurant. He learnt the hard way that preparing good food was not enough in itself to ensure success.

‘I met a Yugoslavian guy who had premises, so I said let me open a restaurant and he agreed. As soon as it started doing well, he turned me away. That was my first experience of doing business.’ Almost needless to say, the restaurant did not last long without Ilic in the kitchen, but the lesson must have been a bitter one.

Nevertheless, he persevered. In 1982 he opened The Lantern with a Polish workmate. Both had savings of £3,000 which they agreed to put into the business. Ilic found premises in suburban London – ‘the middle of nowhere’ – for a monthly rent of £105 and a £3,000 deposit. Somewhat unpromisingly, none of the six businesses that had previously rented the property had survived more than six months.

The spot appeared to be jinxed. Before putting his £3,000 into the business as agreed, Ilic’s partner suddenly decided to go back to Poland.

‘I asked so many people for £3,000 to open the restaurant. I offered them 50/50, even though they would never have to work there,’ says Ilic. ‘But I couldn’t find anyone. So I went back to the Polish guy and said, “You’ve put me in this position, now you have to give me the £3,000.” He gave it to me and I started alone.’

The story says a lot about Ilic’s determination. ‘I was the cook, the cleaner, I was doing the washing-up, and distributing leaflets,’ he says. ‘At the beginning it was just me in the kitchen and another guy out the front.’

Fast expansion

The Lantern’s success led to Ilic hiring more hands, and as the economy boomed, he opened more restaurants. By the middle of the 1980s he had four restaurants including Just Around the Corner, on Finchley Road, where he first tried the “pay what you think it’s worth” promotion.

‘It was 1985, people had more money and they were dining out,’ he says. ‘But my restaurants were still very reasonably priced. With Just Around the Corner, I thought, why not let customers decide if the prices could be any more reasonable?

‘I was planning to do it for a short time, but found that people were paying more on average. So we kept doing it for two years. And when someone else took over that restaurant, he continued for another ten.’

The first Little Bay restaurant opened in Kilburn in 1992. Branches in Croydon, Farringdon and Battersea followed over the next decade and the group’s turnover is now almost £3 million (16 per cent up on last year).

The menus have stayed largely the same over the years – for all his tinkering with prices, Ilic is the first to admit that in culinary terms, he is not much of an innovator. In fact, if you went back in time two decades and visited one of his restaurants, you’d be able to order many of the same dishes. ‘There is no need to invent anything new,’ he says.

Yet Ilic has broken new ground in recent years, or rather revisited old ground, by opening a restaurant in Belgrade. ‘It’s my country, though it is no longer Communist,’ he says. ‘I do very well there – it’s easier because there is much less competition. During Communism restaurants didn’t progress at all – they stayed still. Everywhere you went the menu was the same.’

Like his homeland, Ilic has travelled a long and sometimes difficult road since the 1970s. When he opened his first restaurant, he had boundless energy, punctuating his labours in the kitchen with frantic dashes around the neighbourhood putting leaflets through doors. He would work for 12 hours non-stop then take his staff to the disco, infecting them with his enthusiasm. ‘It is so satisfying seeing something progress when it belongs to you,’ he says.

Now he has success, a measure of security, but he is no longer full of the vitality that drove him as a youth. ‘I don’t love it as I used to,’ he reflects. ‘One person is good for ten years in one job. That’s why I’m looking for a manager who can take over, create their own team.’

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