“We are a real barometer for the London economy,” Liam Griffin, the boss of Addison Lee, says as we chat in the firms’ Paddington offices.
The private hire taxi firm has been a stalwart of London for nearly 45 years now, ferrying customers through the boom of the early 2000s, the financial crash of 2008 and, more recently, the capital’s re-emergence from Covid-19.
Griffin’s view then, is not without merit – demand for Addison Lee’s service reflects movement between London offices, commuting trends, consumer habits and, by extension, economic productivity.
It is unfortunate – but will come as little shock to City A.M. regulars – that after a brief introduction, our conversation shifts towards a slump in the company’s fortunes over the last six months and how this is representative of the capital’s economic health.
Demand has “softened since the turn of the year,” Griffin tells me, with an economic slowdown to blame.
“We came out of Covid and it bounced back very quickly, and then you came back from Christmas and all of a sudden it started to stutter a bit.”
A slowdown in late night dealmaking?
According to Griffin, whose customer base is made up of a “large chunk” of cityfolk, a cause of this plateau, both for the City and Addison Lee, is the controversial shift towards hybrid working and a slowdown in ‘late night’ dealmaking.
“There are very few deals going on,” Griffin said, and “less people are in the office on a daily basis.”
“People are much more comfortable with doing online meetings now, so they’re not necessarily driving and taking taxis to do face to face.”
This trend, in his view “stops growth”.
“We’ve got to a bit of a plateau quicker, because there are certain changes in working habits that perhaps have been to the detriment of taxi usage,” he says.
These thoughts aren’t just speculation, Addison Lee has actually seen a huge drop off in late night corporate trips from prospective dealmakers, which used to make up a significant proportion of the firms’ customer base.
“The biggest drop off we’ve seen is in the late night, corporate work, the late evening… The big city firms would have this 10 o’clock option where, if you were still in the office after 10 you could get a free cab home and we used to get massive demand between 10 and 11 and 12.”
Now, he explains “people aren’t doing it.”
“I think that, you know, if you were sitting in the office before, and you’re working until nine o’clock, you might think I’ll do another hour and get a cab home. Whereas now I think people would be looking at it at six o’clock and thinking, well I’m not waiting till 10,” he explains.
Why the dip in productivity? Griffin responds “it’s between hybrid working and less, less activity happening.”
Demand for commuting is still there, he argues. “We still see strong mornings. Still strong lunchtime, still strong evening rush hour… But the bits in between, where everybody was active, going to meetings and moving around town. That has dropped off.”
A ‘pound of flesh’ from home workers
Home working has become one of the most hotly debated topics in the City over the last few years, with the traditional view being that heading into the office results in higher productivity and, ultimately, better results.
HSBC’s recent downsizing from Canary Wharf to the square mile represented a big win for the City, but prompted further confidence that the hybrid working movement is here to stay.
Interestingly, Addison Lee’s data reveals pickups from “places like Canary Wharf have been incredibly quiet post pandemic,” with the Isle of Dogs also down “relative to the rest of the market” and the square mile, Griffin said.
Ultimately though, it is a culmination of problems that have led to the UK’s plateauing post-Covid bounceback – a “perfect storm” of issues, as Griffin describes, which include everything from inflation, City blues, hybrid working and policy.
“I think it’s just, you know, there is a sum of the parts that created, a slightly ‘perfect storm’ moment that is making life very, very difficult. And there’s not one silver bullet that’s going to fix all this.”
“It’s gonna take time, and it’s going to take for a few things to unwind, to get back to normality. So I don’t see it solving itself.”
The taxi chief thinks a turnaround in hybrid working trends may be on the horizon though, and remains optimistic for the firms’ future.
“Bear in mind we grew 33 per cent out of Covid. Next year, we’re forecast and we’ll probably go near 15 per cent. So on one hand, it’s a slowdown of growth and on the other hand, most people are perfectly happy with 15 per cent growth, which we are.”
In the coming months, companies will demand a move away from home working as they seek to “get their pound of flesh” from employees, he predicts.
“I think, the working from home, hybrid combination, we’re seeing already that companies are starting to realise they need to get their pound of flesh, that it’s okay when everything’s going swimmingly well, but as soon as it becomes more challenging people want staff in the office.
” Over the next 6 to 12 months, you’re going to see the hybrid model becoming less and less.”