Sometimes, everything must change so that things can stay the same. Since it opened in 1889, Sweetings has been serving fish lunches smack-bang in the middle of London’s Square Mile, closing by 3pm on weekdays, and remaining shut over weekends. It’s maybe the quintessential Cityboy spot, although nowadays you’re just as likely to encounter a bevy of international foodies poring over sauceless tranches of plaice, or sipping black velvets – a heady mix of Champagne and Guinness – from scuffed silver tankards. Custard is poured from jugs, school-dinner style; the peas are muted green and the fish pie comes out cold in the middle. The food is not that great, the wine is much better but that is very much the point. It’s good-ish British cuisine from a time before the British really cared about their food. It is also one of the few restaurants near the Bloomberg Arcade, in the City or, indeed, the capital, that remains completely oblivious to the growth of private equity (PE).
Over the last few decades, the sector’s appetite has grown to a Rabelaisian quantity, gobbling up £1.2 trillion in assets across the British economy, a greater proportion than any other advanced economy. PE firms have snaffled everything from schools, daycare centres, dentists and care homes to water companies, vets and even bucolic little villages in the Cotswolds. Strangely, it has shown a remarkable taste for British food: Asda and Morrisons (and soon, maybe Tesco); Franco Manca, LEON, Prezzo and Wagamama. During the pandemic, private equity accounted for over 40% of British hospitality deals and some 73% of new investment capital. But its path to profit is hardly clear. The stock market is in tatters, and so is the British economy, which means PE can’t sell its wares on to new buyers. From 1999 to today, the average hold time of PE investments has ballooned from 5 to 14 years. So there is a lot of pressure on restaurant owners to drive the growth needed for a profitable sale.
‘They sing sweet songs in your ear,’ says Jon Spiteri, one of St. JOHN’s co-founders and a serial restaurateur, who has witnessed PE’s workings firsthand. He’s not a fan. ‘I’ve seen it and I hate it,’ he tells us. ‘They promise you the Earth and then they tell you you have to open 20 [new branches] in the next six months.’ You can spot the influence everywhere, not just in the high-street chains, but the ever-swelling Hawksmoor group, Quaglino’s, Dishoom and even Soho House. If you add restaurant groups that buy and sell to private equity, or are run like PE firms by former PE-heads, you can throw Richard Caring’s restaurant empire (The Ivy, Sexy Fish, Annabel’s, Harry’s Bar, J Sheekey) into the mix, alongside JKS (Gymkhana, Hoppers, Sabor, Brigadiers, Plaza Khao Gaeng) and a whole bunch of others. ‘Often it’s the case that the most scalable concepts have the biggest chance of a return, so there is this talk in hospitality about: what’s your exit? People create restaurants with that in mind,’ says Daniel Willis, owner of Luca and, formerly, The Clove Club.
What’s emerged is a world where restaurateurs talk like start-up founders, and firms are spending like gluttons. But post-Brexit, post-pandemic and with Britain teetering on the edge of a recession, both restaurants and their backers are beginning to feel queasy. How did we get here? And what does it mean for dinner?
For much of the 20th century, Britain’s cuisine was the butt of jokes from visitors abroad, with Raymond Blanc referring to it as ‘the dark hole of Europe’ after arriving in 1972. But in the 1980s, something started to change. The accepted narrative is that a disparate sprinkling of forceful and talented culinary personalities – many of whom are still active today – helped usher in a revolution in the way we eat and go out.
In 1987, Rose Gray and Ruth Rogers started serving pasta at The River Café; that year also saw Marco Pierre White’s open Harvey’s, Terence Conran and Simon Hopkinson launch Bibendum and Rowley Leigh set up shop at Kensington Place. So it’s tempting to give the chefs all the credit for their vision. But restaurants always follow the money, and by that time, there was a new kind swishing down the banks of the Thames courtesy of Nigel Lawson. His daughter Nigella may have taught us all How to Eat, but as the Chancellor of the Exchequer, he had a much bigger say as to where.
On 27 October 1986, Lawson rattled off a set of financial reforms known as the Big Bang, which allowed foreign companies to list on the London Stock Exchange and opened the UK to a flood of international investment. The change also came with sharp elbows and dimpled promises of meritocracy. The long shadow of postwar rationing finally evaporated as the stock market soared and inflation tumbled to a two-decade low. As the yuppies disembarked from New York, PE investment doubled within a year, alongside a mergers and acquisitions boom that saw the biggest wave of leveraged buy outs (LBOs) in British history up to that point. PE suddenly had access to much vaster reserves of capital and was invited to spread its legs at the table.
Meanwhile, much to the old guard’s horror, the entire roster of British institutional investors was gobbled up in large part by their weightier international cousins. According to the Financial Times, just over 2,500 people receive carried interests in British PE – and they’re mostly men. All that’s changed is that the old boys’ plum-lipped liquid lunches have been swapped for breakfast meetings with a transatlantic lilt.
