London Restaurants Braced for Further Losses as Coronavirus Bites

(Bloomberg) -- As new cases of coronavirus begin to pop up in London, restaurateurs are bracing for more pain, with plans to tighten spending and cut staff hours. Restaurants have already taken a hit with many reporting business down at least 10%, with the drop surging to 50% in Chinatown.

The U.K. has confirmed more than 85 cases, though almost all of them have been outside the capital. That may be changing with cases reported in the city’s teeming financial districts. On Thursday HSBC Holdings Plc partially evacuated its London headquarters in Canary Wharf after an employee tested positive. Deloitte LLP also had a confirmed case in its offices in the City of London on March 3, the Financial Times reported.

D&D London, which owns more than 40 restaurants, says sales were already down about 10 percent this week. The company is instructing individual restaurants to cut staff hours proportionately, has frozen recruitment and is looking at the possibility of other provisions, including reducing opening hours, if the situation worsens. Event bookings are particularly hard hit.

“The corporates are reacting faster, so we have had a lot of event cancelations,” Chief Executive Des Gunewardena says in an interview. “Our core business is down 10 percent, events a bit more, and our view is that it will potentially get worse. “

D&D’s restaurants include Coq d’Argent and Angler in the City financial district, Sartoria in Mayfair and German Gymnasium at King’s Cross.

“We are making our plans and the first thing we are trying to do is run our businesses with slightly fewer hours and staff in proportion to our revenue. If things get worse, we have to look at things like whether we need to open on Sunday nights and that kind of thing, if they become uneconomic. But let’s not call it a disaster yet.”

“The rhetoric this week is pretty frightening stuff, but individual Londoners behave more rationally. It is quite an interesting pattern. The forward bookings are down more and the walk-ins are slightly higher. The reality of the revenue is slightly better than forward bookings are suggesting. But with the news every day, it feels as if it could become worse.

“In 2008, when Lehman collapsed, we has an immediate 20 to 25% reduction in revenue across the board and that lasted for about six months. Things aren’t that bad at the moment.”

If things are troubling for D&D, spare a thought for the owners of restaurants in Chinatown. With locals and Asian tourists staying away, there are plenty of empty tables and normally bustling streets are half-deserted .

“It’s the worst I’ve known it since the 1980s,” says Sunny Lee, whose family were restaurateurs in Hong Kong before relocating to London in 1975. “It’s worse even than SARS,” he says, in reference to the 2003 outbreak of severe acute respiratory syndrome.

The family owns New Loon Fung restaurant on Gerrard Street, located above an Asian supermarket in the heart of Chinatown.

Lee said business has fallen by half because of two main factors. First, Londoners and European tourists are tending to stay away because they think of coronavirus as a Chinese virus. Second, Asian tour groups, on which the restaurant heavily depends, are no longer arriving to London.

In Chelsea, the two-Michelin-star Claude Bosi at Bibendum restaurant is also feeling the pain.

“We are 25% down because we are losing four or five tables a night,” Bosi says. 

“We are missing the tourists. We just have to get on with it and keep things very tight but it is hard for the team,” he says, talking of the need to reduce staff hours.  “Our main costs are staff and rent. Rent, there is nothing much we can do about, so the first people suffering are the staff.”

Chef Jason Atherton, whose London restaurants include the Michelin-starred Pollen Street Social in Mayfair, says business is down between 10% and 15%.

“What I have lost is every night at 6 (p.m.), I usually have four or five tables of Asian guests who like to eat in Michelin-starred restaurants. They are not coming now. We just have to turn up every day and try to keep everything going.

He says things are much worse for him in Shanghai, where three of his four restaurants have been shut down.

In the City, Danish-born Soren Jessen, who opened 1 Lombard Street 20 years ago, says advance bookings for this week were 20% down.

“We are following the advice and washing our hands often and singing Happy Birthday twice,” he said,  referring to calls from health authorities to scrub hands for as long as it takes to sing the song two times. “Installed hand sanitizing gel in the WC’s for the use of our guests. We hope everyone will just use common sense and stay clean and not overreact.”

Not everyone is hurting. JKS Restaurants, which owns 16 establishments, including the always-packed Hoppers and Gymkhana, says the only venue reporting a drop in business is Xu, a Taiwanese teahouse on the edge of Chinatown. 

“General traffic in that area is down,” says Jyotin Sethi, co-owner of JKS. “Across the portfolio, there has been no impact yet.”

And at London’s most-in-demand restaurants, the main impact may have been to make it slightly less difficult to get a table.

Clare Smyth, whose two-Michelin-starred Core by Clare Smyth is booked out far in advance, says that as of last week she had only lost a single table, because the guests were trapped in Italy. “But the amount of last-minute cancelations and no-shows in restaurants in general is appalling,” she says. 

Corbin & King, a group whose restaurants including The Wolseley are normally packed, says business is actually up.

“Everyone thinks we are standing on the abyss, but empirically, it’s not that way,” co-owner Jeremy King says. “I haven’t made fully head nor tail of it, but I am very grateful. We are lucky that if we lose people, we tend to replace them with walk-ins or other bookings. We appeal across such a wide demographic and nationalities, it is just balance. But of course I am worried.”

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

To contact the editor responsible for this story: Andrew Davis at abdavis@bloomberg.net, James Ludden

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