ADVERTISEMENT

Eating Out in London Will Never Be the Same Again

Eating Out in London Will Never Be The Same Again

(Bloomberg) --

The London restaurant industry faces a shakeout following the coronavirus lockdown, with some of the biggest names set to disappear and those that survive often forced to reinvent the way they do business.

“There is going to be a lot of pain and a lot of restructuring,” said Chris Miller, whose White Rabbit Fund owns 15 London restaurants across four brands: Lina Stores, Kricket, Island Poké and Kym’s. “The old model was broken. We had high property prices, we had staff shortages, we had over-saturation and massive competition. This will be a watershed moment.”

Eating Out in London Will Never Be the Same Again

By Miller's estimate, about 60% of restaurants will survive. While that may seem like a gloomy prediction, he remains optimistic that people will still go out and that the crisis offers an opportunity to rebuild around more flexible models. 

Among the biggest challenges is bringing down costs, particularly rent. That's why Miller, along with many other restaurateurs, supports National Time Out, a campaign led by the Hospitality Union industry group, for a nine-month, rental-free period combined with a matching loan and interest-payment postponement for landlords. 

The government said this week that it is considering allowing some hospitality businesses to reopen in July, and that employees who cannot work from home should return to their jobs. Some restaurants are now starting or expanding home delivery, including JKS Restaurants group, which on May 13 started home delivery from Gymkhana and Brigadiers for the first time, while expanding its Hoppers, Berenjak and Motu Indian Kitchen services.

Eating Out in London Will Never Be the Same Again

The U.K. also extended its furlough job-retention program, whereby employees who are not working receive as much as 80 percent of their wages until October. This may ease pressure on restaurants to open in July.

Adapting to social-distancing rules will be a major challenge. Des Gunewardena, chief executive of D&D London, which owns 43 restaurants, said the group’s larger venues will more easily be able to adapt to the new requirements, for example by opening up terraces at locations such as 14 Hills. Much, however, depends on the definition of social distancing. 

“Two meters would be very difficult for us,”  said Gunewardena. “It would mean dropping capacity down to 35% or 40%, which would be difficult to make money. In general, if you have larger restaurants you have more capacity.”

The related difficulty is how to make restaurants both safe and welcoming.

Eating Out in London Will Never Be the Same Again

”You don’t want people’s experience of restaurants in this period to be like going to hospital, with waiters and waitresses looking like they are going to operate on them rather than serve them food,” Gunewardena said.

Still, amid the struggle lies opportunity. Restaurant space will become available, and the endless cycle of rising rents may be halted, at least temporarily. Then there's a chance to experiment. Lina Stores, a pasta restaurant that’s part of Miller's empire, has started a grocery delivery service with fresh produce and pasta, creating a new revenue stream. All-day opening and space reservations are other options being discussed. Gunewardena said shortage of tables created by social distancing means more guests may be willing to accept bookings as early as 6 p.m.

Angela Hartnett, who owns the Michelin-starred Murano and the casual-dining Cafe Murano group, emphasized the importance of pushing for a rent-free period to give restaurants some breathing space. Hartnett said her budgets are based on 50% less business, and she, too, has started takeaway services at one outlet to generate some income. 

“You have to be a bit pessimistic and hope that things turn out better,” she said.  “As soon as we reopen, the landlords are going to want all their rents.”

Even with attractive sites becoming available as part of the shakeout, finding investors with the cash to run them might be difficult, Hartnett said.  

“Restaurants are businesses, not vanity exercises,’' she said. “You need to make them function.”

Vivek Singh is another chef trying to work out how to reopen his restaurants when social distancing means fewer guests. Singh’s venues have private rooms where his team previously served as many as 60 people, a number that seems impossibly high in the post-coronavirus age. Restaurants will have to open all day to spread the flow of people and menus will need to change more frequently to draw in the crowds, as the industry tries to draw in  people at different times and days of the week, he said,

“It is going to take a huge amount of adapting,” said the owner of the Michelin-starred Cinnamon Club and more casual venues such as Cinnamon Kitchen. “The more successful you were before, the harder you will find it to compete.”

Richard Vines is Chief Food Critic at Bloomberg. Follow him on Twitter @richardvines and Instagram @richard.vines.

©2020 Bloomberg L.P.