Michelin-starred British chef Jason Atherton says the UK hospitality sector is in its toughest-ever state, citing soaring costs, punitive VAT and razor-thin margins as he pivots to aggressive expansion in the Arabian Gulf.
Speaking exclusively to Arabian Business in Dubai, where he is set to open four new restaurants, Atherton, who is founder and owner of the Social Company, said the UK’s economic headwinds have stalled growth at home.
“The ink’s not dry on the contracts yet, but we have done a deal with a hospitality group to open four restaurants over the next two years here in Dubai. We are looking at Ras Al Khaimah on the new gaming island. We signed to do something in Saudi in the Red Sea development, and we are looking at a site in Abu Dhabi on Yas Island.”
He said his outlook on the UK was cautious: “We’re not expanding too much in the UK at the moment for obvious reasons. We’re just going to wait for the economy to get a bit stronger and balance itself out.”
The Social Company operates an international portfolio of restaurants, including six in London. He said his Dubai restaurants, such as the critically lauded Row on 45, are “outperforming,” fuelled by robust investor appetite, a deep culinary talent pool and consistent demand.
“Your margin in London, if you’ve got a success story, is between eight and eleven per cent, max. Some people are even surviving on four per cent,” he said. “One shift in economic issues in the UK and you can see a tumbleweed of restaurants going bust and shutting their doors forever…
“If you’ve got a success in the UAE, you can see margins north of 33 per cent. It’s night and day.”
He described the UK’s twenty per cent VAT on hospitality as “a really silly move,” contrasting it with Ireland’s announcement that it will cut the rate to nine per cent in 2026.
“People have got to believe in the UK economy. It’s a couple of million quid minimum these days to open up a restaurant in central London. So you’ve got to have outside investment come in, believe in the UK market, invest in young talent and help them grow their brands.
“That takes a lot of money and vision and courage. It would be a shame to see that not happening in the near future because of the government stifling our industry,” he said.
Atherton also flagged post-Brexit staffing shortages and the cost-of-living crisis as margin-killers, while noting a growing exodus of high-net-worth individuals (HNWIs) from London to Dubai.
He said: “There’s a lot of people who are leaving the UK. A friend of mine whose children go to school in Notting Hill told me that in one year group alone, children from sixteen families were moving to the UAE… You hear these stories more and more. It’s worrying. You think, my God, who’s going to be left?”
However, he reaffirmed his commitment to the UK capital: “We will always operate in London, that’s for sure. We are just not as aggressive in London as we would like to have been, if the economic outlook was a little bit more open to strategic investment…
“It’s really tough. I don’t want anybody to feel sorry for me. That’s not what it’s about, but it’s just reality. I’ve been in the industry now for 40 years. It’s the hardest it’s ever been to make a margin, that’s for sure.”
For now Atherton believes the Gulf region offers the most exciting prospects for premium hospitality: “There’s a lot of positive energy to be absorbed here. A lot of wealthy investors are coming into the region looking for opportunities. The market is very, very buoyant – not just for restaurants, but for hotels, for brands, for everything.”
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