January 2023 very much felt like a hangover from 2022, with businesses across the restaurant sector continuing to face significant challenges, with rampant energy costs, spiralling food price inflation and ongoing rail strikes hitting Christmas takings.
No sooner had the year begun and the first big closures of the year were announced. Burger chain Byron fell into administration, again, leading to the closure of nearly half of its remaining estate; while D&D London shuttered sites in London, Bristol and Leeds as part of a strategic review of its portfolio. Elsewhere, Selin Kiazim and Laura Christie had to close of their Turkish Cypriot restaurant Oklava in east London, with the pair saying they 'fought long and hard' to keep the business going; and over in Copenhagen, René Redzepi confirmed he would shutter his Noma restaurant at the end of 2024 and transform it into a food laboratory.
As if to make matters worse, it was soon confirmed that the Government would slash the level of energy support businesses received to help stave off rising energy costs, with the move leaving operators facing a £4.5bn hike in their bills come the spring.
Staffing troubles continued to plague the sector in 2023, with data published by Fourth in February showing that overall staff headcounts in hospitality remained 11% lower than in 2019. However, there were some reasons for optimism, with recruitment initiative Hospitality Rising hitting 55,000 job applications just 12 weeks after launching its ongoing ‘Rise Fast, Work Young’ campaign, which specifically targets younger workers and looks to raise the profile of hospitality as being a job with career potential.
Wagamama owner The Restaurant Group (TRG) found itself under fire in February from a Hong Kong-based shareholder who called for an ‘immediate and near-term’ change of governance at the business following what it said had been poor performance in its share prices. In a public letter, Oasis Management, which at the time owned a 6.5% stake in the business, described TRG as having ‘one of the worst performing share prices of any UK leisure company; materially worse than its closest peers, and disproportionately worse than what the impact of the challenging sector backdrop would alone justify’.
Elsewhere, McDonald’s signed a legal agreement with the Equality and Human Rights Commission (EHRC) in response to concerns about the handling of sexual harassment complaints made by staff in its UK restaurants. It followed a report that detailed a ‘toxic culture’ that saw ‘at least 1,000 women abused, and predatory employees moved to different stores rather than sacked’.
Gordon Ramsay Group reopened Pizza East's flagship restaurant in London's Shoreditch having acquired the brand from Soho House. The deal marked the first time Ramsay’s business had acquired an already-existing restaurant brand in the UK.
TRG continued to face pressure from activist investors, which came as the group announced plans to offload a further 35 sites from its leisure estate and posted widening losses in its 2022 results. The company reported a statutory loss before tax of £86.8m for the year (2021: loss of £35.2m), which it has blamed on an exceptional pre-tax charge of £117.5m relating to the reduced forecast earnings within its leisure division and the subsequent planned restructuring.
The end of March saw the announcement of the latest Michelin stars for Great Britain & Ireland. Alex Dilling at Hotel Café Royal achieved the rare feat of going straight into the Guide with two stars, despite only opening the year before. Brett Graham’s iconic Notting Hill restaurant The Ledbury also received two stars following its post-pandemic relaunch; as did Ahmet Dede's eponymous Turkish restaurant Dede in Ireland. Alongside them, 20 restaurants have been newly awarded one Michelin star. A further four restaurants, including Apricity in London and Crocadon in Cornwall, received a Michelin Green Star, which highlights those at the forefront of the industry when it comes to their sustainable practices.
The Ledbury sous chef April Lily Partridge was named 2023 Roux Scholar, becoming the second woman ever to win the high-profile cooking competition. It was the first time Lily Partridge - whose CV also includes stints at The Clove Club and Blue Hill at Stone Barns in the US - had entered the competition and this was her final opportunity to do so before passing the competition’s age limit. As part of her prize, she said she planned to visit St Peter, an Australian fish restaurant in Sydney. “My whole career has been focused on meat, so that’d be really good,” she added.
It was announced that Fulham Shore would be acquired by Japanese food conglomerate Toridoll in a deal that valued the casual dining group at approximately £93.4m. The deal, which completed later in the year, saw the Franco Manca and Real Greek operator come under the ownership of Bidco, a newly incorporated company established on behalf of Toridoll for the purposes of the acquisition. Fulham Shore’s board members voted to approve the takeover, as did the group’s shareholders.
April also saw another significant round of high-profile restaurant closures. Italian casual dining chain Prezzo announced the closure of 46 loss-making sites across the country following a strategic review of the business, putting more than 800 staff at risk. Meanwhile, in Devon Lyme Regis-based chef Harriet Mansell said she would be closing her fine dining restaurant Robin Wylde at the end of September in order to give her the space to evolve her business.
The beginning of May brought the Coronation bank holiday, which saw King Charles III crowned. Sadly the festivities led to only a meagre uptick in sales for restaurants, with sales up just 4.42% compared to the equivalent dates in May last year. Pub and bar sales fared noticeably better, with transactions rising 26.7% as consumers made the most of longer opening hours.
Casa do Frango and KOL owner MJMK successfully raised more than £1m in crowdfunding to fuel further growth, which includes a second venture involving Mexican chef Santiago Lastra. The group is one of several high-profile operators to turn to crowdfunding this year to help realise its expansion plans. Others included Honest Burgers, which raised almost £3m to help fund a move into the quick service restaurant (QSR) sector; and chef Merlin Labron-Johnson, which exceeded the £125,000 crowdfund target her set to help him move his Somerset restaurant Osip to a larger, more rural location.
Figures provided by UKHospitality revealed that hospitality was facing ‘chronic’ inflationary pressure, with turnover down 14.7% compared to pre-pandemic levels when accounting for inflation. Further compounding this was data from the Office for National Statistics, which showed that food and beverage prices were continuing to rise despite a ‘substantial’ drop in the overall rate in inflation.
Gareth Ward’s Ynyshir restaurant in Wales was been named the best restaurant in the UK for the second year in a row at the National Restaurant Awards 2023. The restaurant with rooms on the west coast of Wales claimed the title at an awards ceremony held by Restaurant magazine. As in 2022, second place went to Mark Birchall’s Moor Hall in Lancashire, which took home the title of the Best Restaurant in England, while third place was awarded to Rafael Cagali’s Da Terra in east London, with a climb of 18 places. This year’s list shows the return of the capital’s dominance in the restaurant scene, with 66 restaurants from London in the top 100 list and only three in the top 10 located outside of London. The highest new entry at number five and the winner of the Opening of the Year award, sponsored by Tripleseat, was awarded to Henry Harris’ Bouchon Racine, which opened in a small dining room above a pub in Clerkenwell earlier this year.
After 15 years of operating mainly in the UK, The Sustainable Restaurant Association (SRA) launched a globally accessible platform to allow hospitality businesses across the world to sign up to its new Food Made Good Sustainability Standard. Developed with input from international experts, including the Ellen McArthur Foundation, WRAP and the Ethical Trade Initiative, as well as leading food businesses, the SRA said its newly global Standard is the only certification specifically designed to measure a restaurant’s social and environmental impact, wherever they are in the world.
Businesses battling to obtain payouts under their business interruption insurance were given a boost after a High Court ruling that found in favour of a group of businesses, including PizzaExpress, seeking insurance payouts for Covid-19 losses. The judgment covered a series of test cases brought by businesses that also included London International Exhibition Centre Plc, owner of the ExCel London conference centre. In his ruling, Judge Richard Jacobs said that the Supreme Court’s ruling from 2021, which decided that businesses with applicable policies could claim if there had been a case of Covid in the vicinity of their premises, also applied to ‘at the premises’ cover.
Figures from accountancy firm Price Bailey revealed that restaurant closures reached the highest quarterly figure in a decade in the first quarter of the year. Some 569 restaurant businesses entered insolvency in Q1 2023. However, separate data from National Statistics commissioned by Price Bailey revealed that optimism among restaurant owners was on the rise despite the surge in business failures. More British restaurant businesses reported that turnover was rising (33%) rather than falling (22%), a big improvement on six months previously when just 16% were reporting rising turnover compared to 37% saying takings were down.
Jeremy King announced plans to return to the London restaurant scene with plans to open a site in the new Park Modern building near London’s Kensington Palace Gardens. King, who would go on to announced two further restaurant projects – Arlington in Mayfair and Simpsons in the Strand – for 2024, described The Park as being in the grand cafés and brasseries mould that The Wolseley co-founder is known for, but added that it will be ‘very much of the early 21st Century rather than 20th’.
McDonald’s was hit with fresh allegations made by current and recent UK staff that detailed a ‘toxic work environment’. The BBC reported that it had gathered more than 100 allegations of sexual and racial abuse as well as harassment, homophobia and bullying as part of an investigation into workplace conditions at McDonald's. Among the findings, it was revealed that workers as young as 17 are being ‘groped and harassed almost routinely’. The investigation was launched by the BBC after McDonald’s signed a legal agreement with the Equality and Human Rights Commission (EHRC) to better protect its UK staff from sexual harassment back in February. Of the more than 100 allegations from employees, 31 related to sexual assault, and 78 related to sexual harassment. There were a further 18 allegations of racism, while six people made allegations of homophobia. Responding to the investigation, Alistair Macrow, chief executive of McDonald's UK & Ireland, said there was ‘simply no place for harassment, abuse, or discrimination’ at the company.
Spencer Metzger announced he was moving on from The Ritz after 13 years cooking at the high-profile London hotel’s flagship restaurant. In a statement posted to Instagram, Metzger, who first worked in The Ritz kitchen when he was just 15 and rose through the ranks to eventually become head chef, described it as the ‘end of an era’. He also hinted at a new role. “As one door closes, another opens, and I look forward to sharing my next move very soon,” he said.
Delivery and takeaway sales at Britain’s leading managed restaurant groups returned to growth after 18 months of consecutive decline. Figures published in August in CGA by NIQ’s Hospitality at Home Tracker showed that sales in June were 4% ahead of the same month in 2022. Delivery and takeaway / click and collect sales were up by 2% and 7% respectively. However, growth in the delivery channel was driven by increased menu prices, with order volumes falling 8% year-on-year. Sales would continue to rise for the rest of the year.
Arguably the biggest closure announcement of the year came in August when Michel Roux Jr revealed that his two Michelin-starred Mayfair restaurant Le Gavroche would close in January 2024 when its lease expires. In a statement, the chef said he was looking for a better work/life balance without the daily demands of a busy Michelin-starred restaurant and that the upcoming end of his current lease gave him the opportunity to assess and consider his future. “The pressure to be able to deliver the high quality that everyone expects is wearing when it’s every day, and every plate,” said Roux. “The closure of Le Gavroche at this site is about turning the page and moving forward so I can focus on my family as well our other businesses.”
Further sad news came at the end of the month when London-based Istanbulite restaurant Zahter announced the passing of its founder and head chef Esra Muslu. In a statement posted on social media, the restaurant confirmed the chef's death, describing her as a 'vibrant spirit' with 'unwavering positivity'. The statement read: “Today, we mourn the passing of Esra, the visionary founder and head chef of Zahter restaurant. “Her vibrant spirit and unwavering positivity touched us all. “With heavy hearts, we share the news of her peaceful departure this morning. “Her legacy will forever live on in our hearts. Our thoughts and deepest condolences go out to her family and friends during this difficult time.”
The Government confirmed that nitrous oxide, popularly known as laughing gas, was to become an illegal class C substance. Initially, there were concerns from the catering industry that the Government would seek to restrict the supply of the substance - which has applications in a number of culinary processes including making espumas (foams) and cocktails - or require end users to hold a license. But following a consultation the Home Office opted for the soft-touch approach favoured by both the supply side and the catering industry itself. As such, the ‘banning’ of nitrous oxide carries no administrative or cost burden for either suppliers or end users and the substance remains straightforward to procure.
Following months of ongoing investor pressure, The Restaurant Group (TRG) announced it would sell its leisure division to the Big Table Group (BTG). The deal saw BTG pay a nominal fee of £1 for the estate, which comprises 75 sites primarily under the Frankie & Benny’s and Chiquito brands, with TRG paying a cash contribution of £7.5m to Big Table, subject to certain cash, debt and working capital adjustments. Around the same time, the group also announced that its chairman, Ken Hanna, is to step down in 2024 due to ‘personal reasons’.
The former chief financial officer of Patisserie Valerie was charged with fraud along with three others in connection with their role in the collapse of the chain in 2018. The Serious Fraud Office (SFO) has brought fraud charges against former CFO Christopher Marsh and his wife, accountant Louise Marsh, as well as financial controller Pritesh Mistry and financial consultant Nileshkumar Lad. The four suspects oversaw the financial failure of the chain, which at its peak had almost 200 high street locations. A trial is not expected to take place until 2026.
Marcus Wareing announced he would close his eponymous restaurant Marcus at The Berkeley in Knightsbridge in December after 20 years in operation. In a statement, the chef said: The Berkeley has provided me with the most extraordinary platform over the last 20 years. As a chef and restaurateur, it’s allowed me and my team to create some incredible and lasting memories. However, it’s now time for me to move on. I am not retiring quite yet, though - not at all. I’m ready for a new and exciting chapter to begin. I will update on our plans for 2024 in due course.”
Analysis from the CGA Prestige Foodservice Price Index found that a fall in food and drink prices, otherwise known as deflation, is unlikely until ‘at least early 2025’. Price increases had begun to slow in both foodservice and supermarkets, but remained high. All 11 categories of the Index from CGA and Prestige remained in double-digit inflation, though some saw prices drop month-on-month, including fish, fruit and sugars. Meat prices increased again, by 1.7%, and the vegetables category recorded the highest year-on-year inflation of any category at 33.5%.
Following the sale of its leisure division, TRG was bought by US private equity house Apollo Funds. TRG’s board said it had considered all scenarios carefully, including ‘proactive discussions’ with possible purchasers for its individual divisions, but it concluded ‘that the certainty provided by this cash transaction was a superior outcome for TRG shareholders’. The cash deal - which would see the group become a privately-owned company - valued each of the company’s shares at 65p – a 34% premium to TRG’s closing share price of 49p on the day before the deal was announced. The acquisition implied an enterprise value of £701m and a multiple of around nine times TRG’s Adjusted EBITDA for the twelve months ended 2 July 2023.
Elsewhere, D&D London announced it would be sold to Calveton and Breal Capital for a price tag of £60m. The deal would see both Calveton and Breal invest proprietary capital 'patient' money, unlike institutionally backed private equity funds with exit time horizons. D&D said the investment would result in a '£40m balance sheet recapitalisation', which will give the group 'a clear runway for continued success and further growth'.
Australia claimed the title of the producer of the World’s Best Steak following the results of the 2023 World Steak Challenge. Australian producer Jack’s Creek took home the accolade for its grain-fed wagyu black angus cross sirloin, which was also named the World’s Best Sirloin and World’s Best Grain Fed Steak as well as Oceanian’s Best Steak. Jack’s Creek cattle are bred and raised on the natural pastures that surround Willow Tree in central New South Wales. They are then finished on a blend of grains, hay and silage. The World’s Best Wagyu and also Asia’s Best Steak went to Itoham Yonekyu Holdings for its A5 Wagyu sirloin from the Japanese Black (Kuroge Washu) breed of cattle, while The World’s Best Rib-Eye was awarded to Alliance Group for its 55-day aged ribeye, with the company also taking the title of World’s Best Grass-fed Steak. The World’s Best Fillet Steak and Europe’s Best Steak was a 28-day aged Norland Heifer fillet from a German Rotbunte and Charolais/Limousin breed from Danish Crown South America’s Best Steak was a rib-eye from Azul Natural Beef with Creekstone Farms’ Ribeye wet-aged rib-eye steak from a Black Angus breed being named North America’s Best Steak. The winners were crowned at a special dinner held at steakhouse Smith & Wollensky following a two-day judging process held in September at Vlees & Co steakhouse in Amsterdam.
The optimism of Britain’s hospitality leaders rose for the fourth quarter in a row, but they remain concerned about inflation in key inputs, and the challenge of business rates. The October edition of the Business Confidence Survey from CGA by NIQ and Fourth, published in November, showed 49% of leaders now feel confident about the hospitality market over the next 12 months — up by four percentage points from August’s figure of 45%. The proportion of leaders who feel optimistic about prospects for their business in the next year is unchanged at 62%. The survey indicated important improvements at businesses that have been left fragile by Covid and the costs crisis. Only 5% of leaders said their business is currently at risk of failure — down from 11% last quarter. The number feeling pessimistic about the market dropped from 31% in August to 18% in October. With regard to business rates, Chancellor Jeremy Hunt would confirm later in the month that operators in England would continue to benefit from a 75% discount on their bill through 2024.
Jamie Oliver returned to the London restaurant scene for the first time since the collapse of his UK estate in 2019 with the opening of Jamie Oliver Catherine St in Covent Garden. Located within a Grade 1 listed site next to the Theatre Royal Drury Lane, the restaurant was billed as ‘a celebration of Britain’s rich food culture’ with the menu taking inspiration from dishes Oliver used to cook while working in his parent’s pub. Heading up the kitchen is head chef Chris Shail and pastry chef Emma Jackson, who both previously worked Oliver at Barbecoa.
November ended on a sad note with the death of multi award-winning restaurateur and author Russell Norman. He was 57. In online tributes, Norman was described as ‘one of the most gifted of restaurateurs’ and credited with ushering in an era of more informal but no less considered dining. “[He was] such a big and creative personality, larger than life, generous and charming,” said Rachel O'Sullivan, who led the kitchen of Norman’s American diner-style restaurant Spuntino. “He injected so much energy into the hospitality industry, stripping it of its somewhat stuffy and serious ways and bringing some much-needed joy in dining out to the forefront. The right lighting and the right playlist were just as important to him as the service and food offering.”
Hospitality businesses breathed a sigh of relief in December as the RMT union voted to accept a pay deal that will end their involvement in rail strikes until at least the spring. However, the relief was short lived as the sector was subsequently hit by a ‘rolling programme’ of walkouts organised by the Aslef union, which represents train drivers. UKHospitality estimated that the industrial action would cost the sector half a billion in lost sales, bringing the total impact of the disruption since it begun in June 2022 to over £4bn.
The collective debt burden of the UK’s top restaurant groups has broken through the £3bn mark for the first time, new research by UHY Hacker Young showed. Despite the sector’s efforts to cut debt, levels for the top 30 restaurant companies ranked by revenue increased over in the last year from £2.96bn in 2021 to 3.03bn in 2022. UHY Hacker Young noted that restaurant companies had built up substantial debts during the last decade as the sector expanded rapidly. With profits in the sector often dependent on scaling chains quickly, many restaurant groups became overleveraged. Additionally, many restaurant companies were also forced to take on further debt during the Covid-19 pandemic through the Government's Bounce Back and Business Interruption loan schemes. The sharp rise in interest rates then substantially added to the strain of servicing that debt over the last two years, with the rising cost of living further compounding the pressure on restaurant operators.
The year ended with the Government publishing a draft code of practice on the fair and transparent distribution of tips, which will come into effect on 1 July 2024. The new code relates to the Employment (Allocation of Tips) Act 2023, which received Royal Assent back in May and will make it unlawful for businesses to hold back service charges from their employees, ensuring staff receive the tips they have earned. As outlined in the code, the determining factor in whether a tip is qualifying or not is whether the employer receives (in the case of employer-received tips) or exercises control or significant influence over (in the case of worker-received tips) the distribution of tips.