Boom to bust for trendy restaurants

Mark Rowe on fears for the health of an overstretched industry
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HAS the bubble finally burst on the booming restaurant scene? While a modern eatery seems to open up every week in the capital, restaurateurs fear that many have a shelf life little longer than the food they serve.

In the past year, half a dozen high-profile restaurants have closed within six months of opening, rather in the way that plays fold after a short, unsuccessful run.

The boom in eating out was fuelled by the increase in Dinky (dual income, no kids) couples with time and money to spare. But as new restaurants face forbidding start-up costs and competition from large restaurant chains, there is a suspicion that the dining-out experience has reached saturation point.

The twitchiness in the market was highlighted last week by a rumour that whistled around London's fashionable eating houses. The word over the ciabatta and roasted figs was that Villandry, a wildly popular Mediterranean- style eatery, had gone into liquidation.

Although reports of Villandry's demise were exaggerated, owner Jean- Charles Carrariniadmitted it had been a close-run thing. "It's true that we had problems with money owing to builders. We thought that we were not going to pull through," he said.

Villandry, which opened nine years ago, moved to Great Portland Street, an up-and-coming stretch of the capital, in November. "We opened two months late and that was enough to put a non-balance on to the cash-flow," said Mr Carrarini, who said a private investment had shored up the business.

Villandry's experience throws into sharp relief the difficulties facing new eating enterprises. Kassoulet in Notting Hill Gate, the sister restaurant to the successful and trendy Kartouche, lasted barely six months; Gabriel's in W1 shut after six months due to over-running its budget before it opened; DCO, based in a Clerkenwell office conversion, didn't last six months.

Then there is the glassy and designer Cento 50 in Notting Hill Gate, serving Mediterranean food, which stayed open for nearly a year before giving way to Damien Hirst's Pharmacy restaurant. A similar experience awaited Christophe's, a trendy Chelsea public-school eatery. It closed after six months, while Hollihead in the West End lasted less than three months.

Whether a restaurant is generally recognised as "good" is not relevant to its success, said Gordon Damzen, restaurant consultant and marketing director of Restaurant Services. "It's marketability is more relevant. The restaurant is a dining experience. It's all about atmosphere, food and service." He added: "The main reason restaurants go bust is they go over budget. They have a budget but then they are told to spend pounds 50,000 on ventilation and the builders over-run. A host of things come up that they never budgeted for."

Typical start-up costs can be anywhere from pounds 100,000 to pounds 500,000 for a modest, medium-sized restaurant. Mr Damzen said it was not unusual for a successful restaurant to be crippled by debts. "A restaurant can be pushed into liquidation when it's full every night. The reason they close is that every penny they earn is paying off interest."

Hard-nosed investors may be responsible for the "here today, gone tomorrow" nature of some restaurants, according to the Independent on Sunday's drinks correspondent, Richard Ehrlich. "People who invest in a restaurant for the money but are financially astute will pull out if it's not working. But if it's a family business or you've made a career change, then you'd try to keep going a while longer."

It is a point recognised by Mr Carrarini: "As an independent we faced a cash-flow crisis straight away. The big chains can rely on other outlets to sustain new restaurants." He fears that the individual restaurateur is being squeezed out. "You need a personal touch, otherwise it might as well be a bank," he said. "The service industry is becoming owned by multinationals. It means less individuality. It's important that restaurants don't become like supermarkets, all looking alike. You now find very few independent restaurateurs. It's difficult and will get worse. Little people with good ideas cannot sustain them."

Mr Ehrlich agrees. "Business for restaurants has been good but it can't last for ever," he said. "There are just too many restaurant chasing too few mouths. This may be the beginning of a tidal wave."