Success has come from a diverse array of industries, including ice cream, care homes and nurseries. He’s now moving into casinos and reckons he’ll clean up once again. Here’s our interview with the strongly opinionated UK entrepreneur.
Business doesn’t motivate me – I find it really boring, which is why mine are run by my management team,’ claims Duncan Bannatyne. With two businesses to his name at present, a third in the pipeline and having sold past ventures for over £60 million, Bannatyne can afford to be a little complacent.
His background is typical of many successful entrepreneurs. His father worked in a foundry in Clydebank and Bannatyne was one of only a handful of students at his school without the luxury of a uniform.
His first entrepreneurial act was to convince the local newsagents to give him a paper round so he could afford a bicycle – all he had to do was to come up with 100 local names. ‘I took the list to the shop and got the paper round – what I should have done is sold that list!’ he grins.
Exploiting opportunities
After leaving school he joined the Royal Navy where, for a £10 bet, he attempted to throw his commanding officer off the side of an aircraft carrier. He paid for this by serving a nine-month jail sentence. Once free, he worked in agriculture, repairing vehicles, before decamping for a decadent party lifestyle in the Channel Islands. This ended when, aged 30, he found himself incontrovertibly broke.
With all avenues blocked, he moved to Teesside with his girlfriend (where her relatives lived) and bought an ice cream van for £450 at auction. So was launched his first business – Duncan’s Super Ices.
Despite expanding the ice cream business to six vans based around Middlesborough, altogether turning over around £350,000 a year, and netting him £60,000 in profits, he quit after his weight ballooned to almost 17 stone.
An intense fitness regime returned him to his normal size and he then turned his attention, bizarrely, to old people’s care homes at a very opportune moment.
‘It was the time that Maggie Thatcher had changed the laws relating to financing care homes [The Registered Homes Act 1984]. I visited one home and saw eight people crammed in one room. I decided I could build a brand new one by buying a plot of land,’ recalls Bannatyne.
The land cost £30,000 and the contract to build the home would cost in excess of £200,000 but no bank would loan him the money. So he found other means of funding his plan.
‘At that stage credit cards were giving up to £10,000 in credit – so I got myself into debt up to my eyeballs. I sold my car, my house and stopped paying my suppliers. I couldn’t make the last payment but convinced the builder to complete the work and charge me ten per cent interest per month. I owed him £60,000,’ he adds.
A bank had told him that once the home was full, it would value the business and lend Bannatyne that amount. Over a weekend he got his mother’s friends and family to ‘occupy’ the home, duly convinced the bank, and used the money to square his debts.
Quality Care Homes (QCH), which could accommodate up to 30 people in single rooms, was full within three months and the business expanded rapidly from there.
From care homes to health clubs
However, such rapid growth (in six years there were 12 QCH sites) racked up several million worth of debt. To repay this, Bannatyne floated the business on the stock market in 1992, raising £26 million. He sold it five years later to Principle Healthcare for £46 million, bagging £26 million for himself.
In the same year he injured his leg in a skiing accident. Needing rehabilitation treatment, but realising that the nearest gym was more than ten miles away, Bannatyne did what he does best – set up on his own by buying land and ploughing £20 million into what became Bannatyne Fitness.
Today, the business claims to be the UK’s largest independent health club operator, with 34 clubs (the aim is to get to 40 by the end of next year) and turnover of around £30 million. Despite the ups and downs of the health club industry (the last two years have seen various competitors issuing profit warnings and becoming the victims of takeovers), Bannatyne is confident that he will not face the same issues.
‘I haven’t made the same mistakes as other health club operators – most of them have been or are public companies and want to have a big presence in London, renting space. Some areas have got competitive but we’ve been able to hold our own.’
Luxury style
Besides the chain of fitness clubs, Bannatyne also found the time to establish, with £2 million of his own cash, a nursery and childcare chain, Just Learning, which he later sold to Alchemy Partners for £22 million in 2001. Along the way, he acquired the Grange Hotel in Darlington, establishing it as a luxury haven in the North-East of England. But, unlike his other ventures, he is adamant there will only be one hotel.
‘I don’t want to expand in the hotel business because it’s hard work. People book rooms and cancel at the last minute, they steal towels and dressing gowns, flood the bathroom, wet beds and demand service at all times for a small amount of money. Dealing with people can be very labour-intensive for very small margins – one hotel is enough!’ he stresses.
Upping the stakes
Instead, he’s turned his attention to the gambling industry, taking advantage of relaxed gaming industry regulations. He’s looking to inject his trademark touch of luxury by ploughing £5 million into a concept for upmarket casinos, the first of which is being built in Newcastle’s fashionable Quayside. A key attraction amongst the usual assortment of blackjack and roulette tables will be a gourmet dining area providing live entertainment.
‘It’s all self-funded and will be built on the site of our Newcastle health club, which has been one of the less successful ones. It’s very early days yet – it took 18 months to get the licence and cost £250,000. We’ll do one site first and take it from there,’ he comments.
From all of this one thing is clear – Bannatyne is a man who wants to own it all. ‘I invest in me and that’s it. If I open a second casino I’ll buy the land and build on it. It’s the most profitable way to run a business. I thought for a mini-second about taking money from venture capitalists – and they have wanted a lot of our business! But I have never been tempted.’
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