London Restaurants Expand to Gulf as UK Tax Burden Rises

A wave of London-based eateries is moving its operations to the Middle East.

James Robson, co-owner of Fallow in St James's Market, recently signed a deal to open a new branch in the Gulf. Fallow serves 1,000 patrons daily and gained a large following on Instagram, where it has 650,000 followers. The restaurant is known for dishes such as a whole cod's head served with a spicy butter sauce.

Robson is part of a growing group of high-profile brands making the move. Scott's of Mayfair opened in Dubai, as did Gymkhana, an Indian restaurant holding two Michelin stars, and Park Chinois, an upscale Chinese venue. Bread Ahead, a bakery from Borough Market, also expanded into Dubai, while Isabel's, a Mayfair restaurant popular with politicians, opened in Abu Dhabi.

These expansions proceed despite regional instability. Earlier in the year, the US-Israeli war in Iran led to bombardment in Dubai and a departure of many expatriates. Some venues are still feeling the impact. Dinner by Heston has remained temporarily closed since the conflict began. The Michelin guide drew criticism earlier this month for listing 16 restaurants that were closed, a result of inspections conducted at the start of the year before the war.

Robson, speaking from Hong Kong where he is exploring Asian markets, identified East Asia, the United States, and the Gulf as primary growth areas. He noted that America champions business while the Gulf actively assists. He argued that East Asia possesses a work ethic and taxation system that puts the UK to shame.

The UK's hospitality VAT rate is a central point of contention. At 20%, the rate is among the highest in Europe, where the average for restaurants is approximately 12%. Italy charges 10% on food sold in restaurants. Chefs are urging Chancellor Andy Burnham to reduce the rate in next week's budget. Robson stated that the country has sleepwalked into multiple anti-growth taxations in the last two budgets. He also cited 25% corporation tax and dividend tax of 40% or more, calling for VAT to align with European levels.

Michelin-starred chef Jason Atherton now spends one-third of his time at his Dubai restaurant. He said it is easier to make a profit abroad 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, so he is playing it safe at home and focusing overseas.

Human rights groups are urging caution on these expansions. Felix Jakens, director of campaigns at Amnesty International UK, said the UAE has a very poor record on workers' rights and protection from labour exploitation. He noted that the country's heavy spending on its UK image, including through Manchester City, should not distract from how workers are treated.

Jakens explained 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 system exposes them to abuse and denies them the right to form trade unions. He said any UK business expanding into the Gulf must carry out proper human rights due diligence so kitchen staff are treated fairly, paid properly, and able to raise concerns without fear of losing their job or visa.