Fallow Expands to Gulf as London Restaurateurs Cite UK Tax Pressure

James Robson, the co-owner of the popular St James's Market eatery Fallow, has finalized an agreement to launch a new location in the Gulf region. He attributes this strategic move to a combination of a significant increase in domestic fiscal obligations and a more robust work culture in the target markets. Robson describes the home environment as facing a wave of tax burdens that are pushing capital to seek better returns elsewhere.

The restaurant in question is widely considered one of the most sought-after dining destinations in the capital. It serves approximately one thousand customers daily and gained considerable fame through social media platforms. With a following of 650,000 on Instagram, the venue is known for visually striking dishes, including a whole cod head served with a spicy butter sauce. This digital prominence has helped establish its brand equity ahead of the international expansion.

Fallow is part of a broader trend among London’s high-profile dining establishments seeking new markets. Scott's of Mayfair, a well-known spot for celebrities, has already opened a branch in Dubai. Other notable expansions include the two Michelin-starred Indian restaurant Gymkhana and the upscale Chinese venue Park Chinois. The Borough Market bakery Bread Ahead has also entered the Dubai market, while Isabel's, a Mayfair establishment favored by political figures, has set up shop in Abu Dhabi.

These openings are occurring despite recent geopolitical tensions in the Middle East. Earlier in the year, the conflict involving the US, Israel, and Iran resulted in bombardment of Dubai and led to a departure of many expatriates. Some dining venues are still recovering from this period. Dinner by Heston, for instance, has remained temporarily closed since the war's impact. The Michelin guide faced criticism in late September for listing sixteen restaurants that were no longer operating, a situation attributed to inspections that took place before the conflict began.

Robson, who is currently in Hong Kong assessing Asian opportunities, identified East Asia, the United States, and the Gulf as primary growth areas. He noted that the US supports enterprise, the Gulf actively assists businesses, and East Asia possesses a labor discipline and tax framework that he believes compares favorably to the UK. He specifically highlighted the 20 percent value added tax on hospitality as a major issue, noting it is among the highest in Europe, where the average for dining is around 12 percent. Italy, for example, charges 10 percent on restaurant food.

The chef urged the UK government to reduce this rate in the budget scheduled for next week. He argued that the country has adopted multiple measures that hinder growth in the last two fiscal statements and anticipates further changes soon. He also pointed to the 25 percent corporation tax rate and dividend tax of 40 percent or more, calling for the value added tax to be aligned more closely with European standards. Michelin-starred chef Jason Atherton, who now spends a third of his time at his Dubai venue, stated that profitability is more achievable there than in London. Robson added that while he is proud to contribute to the national deficit, the current risk and reward balance in the UK no longer seems sensible, prompting him to focus on overseas growth.

Human rights advocates have called for caution in this expansion. Felix Jakens, the director of campaigns at Amnesty International UK, noted that the United Arab Emirates has a poor track record regarding worker rights and protection from labor exploitation. He warned that the country's significant investment in its image in the UK, including through sports clubs like Manchester City, should not overshadow how employees are treated. Jakens explained that migrant workers, who form the majority of the population, are tied to their employers through a sponsorship system that can expose them to abuse and prevents them from forming trade unions. He advised UK firms expanding into the Gulf to conduct thorough human rights due diligence to ensure kitchen staff are treated fairly, paid correctly, and can voice concerns without fear of losing their positions or visas.