London restaurants open Gulf branches as tax complaints rise

James Robson, co-owner of the St James's Market restaurant Fallow, has signed a deal to open a branch in the Gulf. The decision follows a trend of prominent London eateries expanding into the Middle East, driven by what Robson calls a 'tax tsunami' at home and a more supportive work environment abroad. Fallow serves 1,000 customers daily and has 650,000 Instagram followers, with signature dishes including a whole cod's head in spicy butter sauce.

Fallow joins a list of established London brands that have already set up shop in the region. Scott's of Mayfair, the two Michelin-starred Indian restaurant Gymkhana, and the Chinese venue Park Chinois have all opened in Dubai. The Borough Market bakery Bread Ahead has also expanded there, while the Mayfair restaurant Isabel's, a favorite among politicians, opened in Abu Dhabi. These openings continue despite recent regional instability, including the US-Israeli war in Iran earlier this year, which caused Dubai to face bombardment and led to an exodus of expats.

The expansion comes amid ongoing financial challenges for some operators. Dinner by Heston has remained temporarily closed since the war's fallout. Additionally, the Michelin guide faced criticism earlier this month for listing 16 restaurants that were closed, a result of inspections conducted before the conflict began.

Robson identified East Asia, the United States, and the Gulf as his primary growth targets. Speaking from Hong Kong, he stated that America champions business, the Gulf actively assists it, and East Asia possesses a work ethic and taxation system that contrasts sharply with the UK. Hospitality VAT is a central point of contention. The UK rate of 20% is among the highest in Europe, where the restaurant average is approximately 12%. Italy charges 10% on food sold in restaurants.

Chefs are urging Chancellor Andy Burnham to reduce the VAT rate in next week's budget. Robson argued that the country has 'sleepwalked into multiple anti-growth taxations' over the last two budgets and expects further measures next week. He also cited a 25% corporation tax and a dividend tax of 40% or more, urging a move closer to European levels. Michelin-starred chef Jason Atherton, who now spends a third of his time at his Dubai restaurant, noted that it is easier to make a profit there than in London. Robson said he is playing it safe at home and focusing overseas because UK growth no longer offers a sensible balance of risk and reward.

Human rights campaigners have urged caution regarding the expansion. Felix Jakens, director of campaigns at Amnesty International UK, said the UAE has a very poor record on workers' rights and protection from labor exploitation. He noted that migrant workers, who make up the majority of the UAE's population, remain bound by a sponsorship system that ties them to employers and exposes them to abuse. Jakens stated that these workers are denied the right to form trade unions and that UK businesses must carry out proper due diligence to ensure kitchen staff are treated fairly and paid properly.

The next scheduled event is the UK budget, where ministers will announce new tax measures. Robson and other industry leaders are watching for changes to the hospitality VAT rate. The expansion plans for Fallow and other venues are set to proceed in the coming months.