UK Hospitality: London Restaurants Expand into Gulf

London dining establishments are increasingly establishing presences in the Middle East, a trend driven by domestic fiscal pressures and favorable conditions abroad.

James Robson, co-owner of Fallow, recently signed a contract to open a branch in the Gulf region. Fallow, located in St James's Market, serves approximately 1,000 customers daily and has garnered 650,000 Instagram followers. The restaurant is known for specific dishes, including a whole cod head in spicy butter sauce.

This expansion follows a pattern established by other high-profile venues. Scott's, a Mayfair restaurant, has opened a location in Dubai. Gymkhana, an Indian restaurant holding two Michelin stars, and Park Chinois, a Chinese venue, have also established operations in the city. Bread Ahead, a bakery from Borough Market, and Isabel's, a Mayfair restaurant, have expanded into the UAE, with Isabel's opening in Abu Dhabi.

These developments occur despite recent regional instability. The US-Israeli conflict with Iran earlier this year resulted in bombardment near Dubai and a subsequent departure of expatriates. Dinner by Heston has remained temporarily closed since the conflict began. Additionally, the Michelin guide faced criticism in September for listing 16 closed restaurants, a error attributed to inspections conducted before the war started.

Robson, speaking from Hong Kong where he is evaluating Asian markets, identified East Asia, the United States, and the Gulf as primary targets for growth. He stated that the Gulf actively encourages business, while East Asia possesses a work ethic and tax system that contrasts sharply with the UK.

The primary financial grievance is the value added tax rate for hospitality, which stands at 20% in the UK. This rate exceeds the European average for restaurants, which is approximately 12%. Italy charges 10% on food served in restaurants. Restaurant owners are urging the UK government to lower this rate in the budget scheduled for next week. Robson described recent UK tax policies as anti-growth and cited 25% corporation tax and dividend taxes of 40% or more as additional burdens.

Jason Atherton, a Michelin-starred chef, currently allocates one-third of his time to his Dubai restaurant. He stated that generating profit is easier in Dubai than in London. Robson noted that while he supports UK taxation, the current risk and reward balance does not justify aggressive growth at home, leading him to focus capital overseas.

Human rights groups have raised concerns about labor practices in the UAE. Felix Jakens, director of campaigns for Amnesty International UK, pointed to the region's record on worker protections. He noted that migrant workers, who constitute the majority of the UAE population, remain under a sponsorship system that ties them to specific employers. These workers are currently denied the right to form trade unions.

Jakens advised that UK businesses expanding into the Gulf must conduct thorough human rights due diligence. He emphasized the need to ensure kitchen staff are treated fairly, paid correctly, and can raise concerns without the risk of losing their employment or visa status.