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London restaurants defy recession

This is the text of Harden’s press release of 20 August 2009…

London restaurants defy recession

* Lowest closure rate since 2000

* Openings up 9% year-on-year

* Big-money launches continue

So far as restaurant closures and openings are concerned, the forthcoming 19th edition of Harden’s London Restaurants (published in association with Rémy Martin Fine Champagne Cognac) reports something remarkably like ‘business as usual’. Confounding the expectations of almost all commentators, the past 12 months in fact saw the lowest rate of restaurant closures since 2000 – 64 in total. Openings staged a recovery from the depressed figure of 111 noted last year to 121 – a return to the decade’s normal range (120-142).

Peter Harden, co-publisher of the guide, said:

“Everyone, including us, thought that London’s restaurants were in for a bloodbath in 2009. Well, it just didn’t happen. Earlier this decade, closures twice rose into the 80s, and in 2003 they shot up to 113. Bizarrely, however, this year’s figure of 64 was actually just below even ‘normal’ (65+) levels.

There would seem to be no single explanation of why, during a period of such economic upheaval, the low rate of restaurant closures has so confounded the pessimists. One of the more important reasons may be that most restaurant-going Londoners are still in employment, and many of them have had their disposable income boosted by lower mortgage payments. Another is that active promotion by restaurants is no longer seen as embarrassing, and they have more sophisticated promotional instruments at their disposal (most particularly the offer-driven websites). Yet another may be that many restaurants close in London not because they have to, but because someone with a new venture in mind makes them an offer: if the banks take fright at providing finance for such new ventures, it diminishes the number of purchasers who can provide an exit route for restaurateurs wanting to sell up.”

Harden’s also observes that long-term players at the top end of the industry seem, by and large, to be pushing ahead with plans for big-ticket restaurants. Perhaps most striking is the forthcoming aqua development, of some 17,000 square feet, to be opened in October by Hong Kong investors, on the top of the former Dickins & Jones department store. Such local heroes as St John and Hakkasan are also perservering with plans for major new ventures in the West End, complementing such Easterly forthcoming openings as the Luxe (John Torode), Galvin La Chapelle and Viajante (Nuno Mendez).

Annual openings and closures since 2000 are set out at the end of this release.

Prices, and the Chancellor’s VAT gift to the restaurant trade

The average price of dining out in London, as recorded by the guide, is now £40.73. Prices rose during the year by an apparently modest 1.6%. During the year, however, restaurateurs benefitted from a reduction in VAT (soon to be reversed). If one factors in that temporary VAT reduction, it appears that restaurateurs collectively have increased pre-tax prices by 3.8% over the year.

Peter Harden observes:

“The Government’s temporary VAT reduction does seem to have ended up being more a gift to the trade than to consumers: restaurateurs collectively have not only been able to keep the benefit of the 2.5% temporary reduction in VAT, but also to put their prices up by 1.6% on top of this. The VAT ‘gift’ must have helped soften economic realities for restaurateurs, and may help account at least in part for the surprisingly low level of restaurant closures of late. The reverse of the temporary reduction at the end of this year may therefore prompt something of a market clear-out.”

Openings and closings this millennium

12 months to mid- / Openings / Closures

2000 / 120 / 59

2001 / 131 / 65

2002 / 121 / 66

2003 / 134 / 113

2004 / 133 / 82

2005 / 142 / 67

2006 / 136 / 66

2007 / 158 / 87

2008 / 111 / 71

2009 / 121 / 64

Ten of the most notable openings of past year

Corrigan’s Mayfair

Dockmaster’s House

Eastside Inn

Goodman

Lutyens

Murano

Rotunda

St Pancras Grand

Terroirs

Whitechapel Gallery Dining Room

Ten of the most notable closures of the past year

Aaya

L’Ambassade de L’Ile

Brasserie St Quentin

Caldesi

Drones

Haiku

Lindsay House

Pomegranates

Tatsuso

Ubon

Note to Editors

The 19th edition of Harden’s London Restaurants, in association with Rémy Martin Fine Champagne Cognac, will be published in early September (£11.99) from all good bookshops or from www.hardens.com

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