London Dining: Gulf expansion as UK tax pressures mount

For many Londoners who frequent top-tier dining spots, the scene is shifting beyond the city limits. Several well-known restaurants are now establishing branches in the Gulf region. The primary motivation, according to industry leaders, is a combination of rising tax burdens in the UK and a more supportive business environment abroad. This trend is not just a minor adjustment but a significant strategic shift for some of the capital's most celebrated food venues.

James Robson, co-owner of Fallow in St James's Market, has recently signed a deal to open an outpost in the region. Fallow is widely considered the hottest restaurant in the city, serving 1,000 people daily. It gained fame partly through social media, where it has 650,000 Instagram followers, and through distinctive dishes like a whole cod's head in spicy butter sauce. Robson is not alone in this move. Scott's of Mayfair, a celebrity favorite, has opened in Dubai. So have Gymkhana, an Indian restaurant with two Michelin stars, and Park Chinois, a high-end Chinese venue. Even the Borough Market bakery Bread Ahead and Isabel's, a Mayfair institution popular with politicians, have expanded to the Gulf, with Isabel's opening in Abu Dhabi.

This expansion continues despite ongoing conflict in the Middle East. Earlier this year, the US-Israeli war in Iran resulted in bombardment near Dubai and caused many expats to leave. Some restaurants are still feeling the impact. Dinner by Heston has been temporarily closed since the war's fallout. The Michelin guide also faced criticism earlier this month for listing 16 restaurants that were no longer open. This was likely because some inspections happened at the start of the year, before the war began.

From Hong Kong, where he is exploring Asian opportunities, Robson identified East Asia, the US, and the Gulf as key growth areas. He noted that America champions business and the Gulf actively assists companies. He argued that East Asia has a strong work ethic and tax system that makes the UK look bad by comparison. A central complaint for chefs is the hospitality VAT rate. At 20%, the UK rate is among the highest in Europe, where the average for restaurants is about 12%. Italy charges only 10% on food sold in restaurants. Chefs are urging the government to cut this rate in next week's budget.

Robson said the country has "sleepwalked into multiple anti-growth taxations" in the last two budgets and expects more changes next week. He also pointed to the 25% corporation tax and dividend tax of 40% or more. He wants VAT to be closer to European levels. Michelin-starred chef Jason Atherton now spends a third of his time at his Dubai restaurant. He says it is easier to make a profit there than in London. Robson said he does not resent paying UK tax and is proud to contribute to the country's deficit. However, he argued that UK growth no longer offers a sensible balance of risk and reward. He is playing it safe at home and focusing his energy overseas.

Human rights campaigners are urging caution about this expansion. Felix Jakens, Amnesty International UK's director of campaigns, said the UAE has a very poor record on workers' rights and protection from labor exploitation. He warned that the UAE's heavy spending on its UK image, particularly through Manchester City, should not distract from how workers are treated. Jakens noted that migrant workers, who make up the majority of the UAE's population, remain bound by a sponsorship system that ties them to their employers. This exposes them to abuse. They are also denied the right to form trade unions.

Jakens said any UK business expanding into the Gulf must carry out proper human rights due diligence. This ensures kitchen staff are treated fairly, paid properly, and able to raise concerns without fear of losing their job or visa. For working families and those who value fair labor practices, this raises important questions about the social cost of this business growth.