The cookie crumbles for Luke Johnson

Patisserie Valerie: an expensive setback

"I like to avoid getting bored," observed Luke Johnson before he floated his caf chain, Patisserie Valerie, in 2014. Be careful what you wish for. Last week "the most harrowing of my life", he says an accounting scandal threatened to reduce both the company and Johnson's reputation to a pile of crumbs.

Gaping hole in accounts

Early last week, Patisserie Valerie was a "stockmarket darling worth £450m", notes the Observer. By Friday, "the City's favourite cake shop was looking like a burnt offering", with its shares suspended, its finance director arrested, and a gaping hole in its accounts. The business guru, who owns a 37% stake in Patisserie Valerie was reduced to "shaking out his pockets to find £20m to keep the plates spinning". A rescue plan has been cobbled together but the inquest has barely begun.

Unsurprisingly, the schadenfreude has been flowing freely. Johnson's side career as a punchy columnist on the Financial Times and The Sunday Times has given critics plenty of ammunition to lampoon a man who, in the words of the Observer's Catherine Bennett, "set himself up as a kind of entrepreneur-moralist with a biblical line in rebukes".

Johnson, 56, has certainly always been a "pugilistic" champion of untrammelled free enterprise and the unleashing of "animal spirits", says Deirdre Brennan in Spear's. He was much influenced by his father, the journalist and historian Paul Johnson a former socialist who eventually became "a close confidant" of Margaret Thatcher and credits him with instilling an emphasis on hard work and contrarianism.

Johnson's business career began at Oxford when he teamed up with a fellow medic, Hugh Osmond, to run a successful nightclub evening. Both ended up ditching their original plans to become doctors and Johnson went into the City as a stockbroker. The pair reunited in 1993 when they took control of Pizza Express, says the FT. "It was a deal that would make both their reputations," launching Johnson into the burgeoning "casual dining" sector that would become a hallmark of his career. Pizza Express established itself as a national chain.

Beyond Pizza Express

Over the years, Johnson's Risk Capital Partners investment vehicle dabbled in businesses as diverse as holiday operators and dental surgeries. He also put in a six-year stint as chairman of Channel 4.

But spotting successful restaurant formats was always his forte. As well as running Giraffe and Belgo, he invented the Strada brand and in 2006 bought Patisserie Valerie a Soho institution since the 1920s for just £6m. Described by friends as intellectually restless ("he would come up with 50 ideas a minute", recalls Osmond), Johnson's style is generally to back management teams he believes in and then leave them to get on with it. He's "a man who can be trusted, so he trusts", says one friend.

Until last week, he regarded Patisserie Valerie as "one of his most successful investments". There have certainly been other turkeys. His efforts to crack the US market with Belgo bombed and he had "a painful experience" with Borders, the bookstore chain, which was liquidated in 2011. Johnson has always written frankly about these failures, and the lessons learned from them, says the FT though he says he prefers the word "setback" to "failure". As setbacks go, Patisserie Valerie has certainly been an "expensive one".