Rapid expansion has turned to bust as London’s restaurant scene suffers its worst rate of closures for 28 years. That’s the conclusion of the 28th edition of Harden’s London Restaurants and its equivalent apps, which record 117 closures: the highest since the guide commenced publication in 1991
Some 167 openings were also recorded, lower than the last three years but still the fourth highest figure of the last 28 years.
Net openings (that is Openings minus Closures) of 50 (167-117) were down by 50% on the previous year’s figure of 109 (193-84). Viewed on a graph of net openings, a five-year peak has passed, with net openings back in the range (of 40-75) that encompassed most previous years from the mid-1990s onwards.
A further sign of pressure in the independent market comes from the ratio of openings to closings (i.e. “churn”) which dropped sharply to 1.4:1. Only one previous year has exceded this rate: 2003 when, at 1.2:1, it was a time when for nearly every restaurant that opened another one closed.
The guide’s statistics are skewed to independent restaurants, and – although the guide does award ratings to restaurant groups – chains with more than three branches are excluded from the openings and closures statistics it publishes. If the effects of well-publicised closures in large chains such as Jamie’s Italian and Byron were included it would make the picture presented by the statistics even more dramatic.
The guide’s co-founder, Peter Harden, said:
“It used to be the case that good restaurants as a rule did not close. But the last year has seen losses at the top end such as Marianne, landmarks such as The Gay Hussar, and highly-rated start-ups like Killer Tomato, which should have been a success story, but which came and went almost as quickly as it began.
The level of competition within the London restaurant market is unprecedented and is creating business conditions even more challenging that elsewhere in the UK.
In 2003, the previous peak for closures, it was different: the hit to the market came from a slump in demand due to the second Gulf War, SARS, and the lowest hotel occupancy rates of recent decades. This time, the problem is purely and simply a case of over-supply: too many restaurants chasing a level of demand that although it continues to rise is doing so only slowly.
On the plus-side, London’s restaurateurs have proved incredibly resilient and “up for the challenge” and the Capital is now a must-have location for global operators. Restaurateurs continue to open brilliant newcomers at a rate that remains at a very healthy level. Their drive and ambition to succeed in a tough market is what presents London’s diners with a dining scene that maintains a level of excitement rivalled only by New York globally.”