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.
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.”
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 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.
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