05/11/2018 Picture by Charlie Bibby/Financial Times Closed restaurants in London for UK news story. Photograph shows: The site of former restaurant “The Gay Hussar” in the Soho, London.
The Gay Hussar in Soho was a favourite haunt of leftwing politicians and union leaders © Charlie Bibby/FT

The London restaurant scene has suffered its worst year for closures in decades as a rapid expansion turned to bust.

About 117 independent restaurants closed in London in the 12 months to September 2018, 40 per cent more than last year and surpassing 2003’s peak of 113, according to Harden’s London Restaurants guide.

“There are just too many restaurants out there,” said Peter Harden, who has compiled the guide, now in its 28th year.

Prominent among the closures was the Gay Hussar, a Hungarian restaurant in Soho that was a favourite haunt of leftwing politicians and union leaders.

A graphic with no description

The statistics provide evidence of the strains in the restaurant industry, which has been battered by overcapacity and rising costs. The number of restaurant insolvencies in the first three quarters of this year in England and Wales was greater than in all of last year, according to the Insolvency Service.

The wave of London closures follows what Mr Harden described as “peak restaurant” in 2015 and 2016, when more than three opened for every one that shut. “People were just throwing new concepts at the market,” he said. In the past year 167 restaurants opened in the capital — down from 193 in 2015 — meaning that 50 more restaurants opened than closed.

Driving this were property developers who viewed restaurants “very much as a way of demonstrating that your development is vibrant and a happening place where people should go and locate their staff.”

PYBJA6 Kings Cross, London, UK. 26th Oct 2018. People looking around the new Coal Yard Drops at Kings Cross, on the first day of opening. Industrial heritage combine with modern architecture to give an amazing shopping and lifestyle experience. Credit: Monica Wells/Alamy Live News
Coal Drops Yard in King’s Cross © Monica Wells/Alamy

He pointed to Bloomberg Arcade in the City and Coal Drops Yard in King’s Cross, two recent developments with almost 10 restaurants each, saying “All of these big property developments are accompanied by a slew of restaurant openings and, of course, they suck in diners.”

Another factor behind the glut was that being a restaurateur had become cool. “There are loads of people with a dream who have always wanted to open a restaurant, who are prepared to chuck time and money at it, and drive down returns for everyone else because the motivation to be in the market doesn’t necessarily come from moneymaking,” he said.

The guide’s ratings come from a panel of 8,000 people who submitted 50,000 reviews. Harden’s mainly covers quality independent restaurants, and the figures stop counting additional branches of chains after they expand beyond three. But “casual dining” chain restaurants have also been in hot water, with Jamie Oliver’s Italian, Byron, Carluccio’s and Prezzo all closing large numbers of branches this year.

The Brat restaurant, Redchurch Street, Shoreditch, east London, UK. Brat has strong Basque influences on their menu, which originates from rustic Spain all cooked on an open wood fire grill. © Matt Writtle / Evening Standard / eyevine Contact eyevine for more information about using this image: T: +44 (0) 20 8709 8709 E: info@eyevine.com http://www.eyevine.com
London's hottest new restaurant is Brat, according to Harden’s guide © Matt Whittle/Eyevine

The closures come despite buoyant spending on restaurants. Spending on restaurants, hotels and bars rose 7.7 per cent in September compared with a year earlier, according to data from card provider Visa, the highest of any consumer spending category.

Mr Harden downplayed factors that high street businesses usually complain about, such as business rates, inflation and staff shortages. “They’re not details, they are a significant part of the landscape, but the really significant factor is the huge surge in net openings.”

The hottest opening according to the guide is Brat, which is named after the Old English word for turbot and is located in a former strip club in east London’s Shoreditch district. Meanwhile, The River Cafe retained its title as the most overpriced restaurant.

Get alerts on Travel & leisure industry when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article