Several prominent London restaurants are turning to Dubai and other Gulf markets for expansion, citing high taxes, rising business costs and a more supportive investment environment overseas as major reasons for shifting their growth plans beyond the UK.
James Robson, co-owner of Fallow, a popular restaurant in London’s St James’s Market, has signed a deal to establish an outlet in the Gulf. The restaurant, which serves around 1,000 customers daily, has gained popularity through its distinctive dishes and a strong social media presence, with approximately 650,000 followers on Instagram.
Robson believes the UK’s growing tax burden has made business expansion increasingly difficult and reduced the incentive for entrepreneurs to take financial risks. He has identified the United States, the Gulf region and East Asia as important markets for the company’s future growth, citing favourable business conditions and taxation policies in these regions.
Fallow is not the only London establishment looking overseas. Several well-known restaurant brands have already expanded into the Gulf, particularly Dubai. These include Scott’s, a celebrity-favoured Mayfair restaurant; Gymkhana, a two-Michelin-starred Indian restaurant; Park Chinois, an upscale Chinese dining establishment; and Bread Ahead, a popular bakery from London’s Borough Market. Isabel’s, another established Mayfair restaurant, has opened an outlet in Abu Dhabi.
The expansion is continuing despite geopolitical tensions in the Middle East, which have affected Dubai’s business environment and prompted some expatriates to leave the region earlier this year.
A major concern for British restaurateurs is the value-added tax (VAT) rate applicable to the hospitality sector. At 20 per cent, the UK’s rate is significantly higher than the European average of approximately 12 per cent for restaurants. Italy, for instance, applies a 10 per cent VAT rate to restaurant food.
Robson has urged the British government to bring hospitality taxation more in line with European levels, arguing that the combination of VAT, corporation tax and dividend taxation is making investment in the country less attractive. The UK corporation tax rate stands at 25 per cent, while dividend tax rates can exceed 40 per cent.
He has expressed concern that successive budgets have introduced measures that discourage business growth, adding that the situation has reached a point where taking risks to expand within the UK no longer offers an attractive balance between potential returns and costs. He has also called for a reduction in hospitality VAT in the upcoming budget.
Michelin-starred chef Jason Atherton has similarly highlighted the commercial advantages of operating abroad. He now spends about a third of his time at his Dubai restaurant and believes generating profits can be easier overseas than in London.
However, the Gulf’s appeal to international businesses has also raised concerns about workers’ rights. Amnesty International UK has warned that the United Arab Emirates has significant shortcomings in labour protections, particularly concerning migrant workers, who constitute the majority of the country’s population.
Felix Jakens, Amnesty International UK’s director of campaigns, has cautioned that the region’s business opportunities should not overshadow concerns about the treatment of workers. He pointed to the sponsorship system that can tie migrant employees to their employers, exposing them to potential exploitation. Workers also face restrictions on forming trade unions, limiting their ability to challenge unfair employment practices.
The organisation has urged British businesses expanding into the Gulf to conduct proper human rights assessments and ensure that employees receive fair wages, are treated appropriately and can report grievances without fear of losing their jobs or residency status.
The region’s restaurant industry is also facing commercial uncertainties. Dinner by Heston, a high-profile restaurant in Dubai, remains temporarily closed following the fallout from the Middle East conflict. The Michelin Guide also faced criticism after its latest listings included 16 restaurants that were either temporarily or permanently closed, with some inspections reportedly having taken place before the conflict escalated.
Despite the challenges, Robson has maintained that he remains proud to pay taxes in Britain and intends to continue contributing to the country’s finances. His concern, he said, is that the current business environment offers insufficient incentives for domestic expansion.
As established British restaurant brands explore international markets, the debate over taxation, investment conditions and labour standards is becoming increasingly significant for the hospitality industry, highlighting the competing economic and ethical considerations shaping overseas expansion.
