London dining groups open Gulf branches to offset high UK tax rates

James Robson, co-owner of Fallow in St James's Market, has signed a deal to open a new restaurant in the Gulf. Robson attributes the move to a "tax tsunami" in the United Kingdom and a stronger work ethic in the target region.

Fallow serves 1,000 customers daily and has 650,000 Instagram followers. The venue gained popularity through dishes such as a whole cod's head served in a spicy butter sauce.

Robson is part of a wider trend among London's leading dining establishments. Scott's of Mayfair, the two-Michelin-starred Gymkhana, and the Chinese venue Park Chinois have all opened in Dubai. Bread Ahead from Borough Market and Isabel's from Mayfair have also expanded, with the latter opening in Abu Dhabi.

These openings proceed despite recent conflict in the Middle East. The US-Israeli war in Iran earlier this year caused bombardment in Dubai and led many expatriates to leave the area. Dinner by Heston remains temporarily closed following the war. The Michelin guide faced criticism this month for listing 16 restaurants that are no longer open, as inspections for those listings occurred before the conflict began.

Robson, who is currently in Hong Kong, identified East Asia, the United States, and the Gulf as primary growth markets. He stated that America champions business, the Gulf actively assists companies, and East Asia possesses a work ethic and taxation system that contrasts sharply with the UK.

A 20% value added tax on hospitality is a key grievance for restaurant owners. This rate is among the highest in Europe, where the average for restaurants is approximately 12%. Italy charges 10% on food sold in dining rooms. Industry leaders are urging Chancellor Andy Burnham to lower the rate in next week's budget.

Robson described the UK as having "sleepwalked into multiple anti-growth taxations" over the last two budgets. He expects further changes next week and cited 25% corporation tax and dividend taxes of 40% or more as additional burdens. He called for UK VAT to align closer with European levels.

Jason Atherton, a Michelin-starred chef, now spends a third of his time at his Dubai restaurant. He said making a profit is easier abroad than in London. Robson said he does not resent paying UK taxes but argued that domestic growth no longer offers a sensible balance of risk and reward. He plans to maintain a conservative approach at home while focusing on overseas expansion.

Human rights groups are advising caution. Felix Jakens, Amnesty International UK's director of campaigns, noted that the UAE has a poor record on workers' rights. He warned that the country's spending on its UK image, including its support for Manchester City, should not distract from labor practices. Migrant workers, who form the majority of the UAE population, remain tied to employers through a sponsorship system. They are denied the right to form trade unions. Jakens said UK businesses must conduct proper human rights due diligence to ensure kitchen staff are treated fairly, paid correctly, and can raise concerns without fear of losing their visa or job.

The next budget is scheduled for next week, where ministers will address fiscal policy and tax rates for the hospitality sector.