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.
PE first emerged in the United States after World War Two to buy private companies (or take public ones private) and then sell them on for a profit. Some emerge the better for it, but PE often does so via those LBOs, which involve borrowing vast sums of money and then slapping the debt on the newly acquired balance sheets. The whole business is hugely profitable and has consistently outperformed the stock market, but to service that debt, PE often cuts staff, hikes prices, asset-strips or, like we’ve seen with so many UK restaurants, expands like crazy. While they tend to swoop in during the hard end of the economy when prices are low, they adore anti-cyclical businesses with revenue streams that are recession-proof. And people always need to eat, even if, in Thatcher’s Britain, they weren’t particularly discriminating as to what.
But by the 1990s, those attitudes were changing fast. ‘If the Big Bang had any effect, it’s that it threw all the cards up in the air,’ says Jeremy King, probably the most celebrated London restaurateur of his generation. When I met him in October, he was sipping mint tea in the wood-pleated dining room of his cavernous new Queensway restaurant, The Park. ‘It was a golden age for opening restaurants,’ he remarks, albeit with strings attached. ‘The thing I’m always quoted on is that: “restauranteuring” is when the owner does it from the floor; “restaurant owning” is when it’s done from the boardroom,’ he says. There’s a reason he’s keen to repeat this. In 2022, his portfolio of nine restaurants – from Lucian Freud’s beloved Wolseley to the theatrically grand Brasserie Zédel off Piccadilly – was bought from underneath him after a private equity-adjacent deal turned sour. But King says the rumblings of this tectonic shift were discernible, even during the glory years.
To its credit, PE was ahead of the curve in gauging that something had changed; not just that chefs had become rock stars, as the old adage goes, but that restaurants had formed into an industry. According to the Office for National Statistics, British restaurant expenditure has increased by an average of 4% every year from 1985, ballooning from a pre-bang £5.5 billion to over £47 billion today (a threefold increase adjusted for inflation). Its golden child, Luke Johnson, evidently caught the scent and made his name floating Pizza Express on the stock markets in 1993, before rolling out the concept across the country. Then there was Guy Hands of Nomura International, who used a series of LBOs in the mid-1990s to become the UK’s biggest pub landlord. Securitising their revenue streams to repay debt, he called it ‘crack cocaine for financial services’. And finally, Graphite Capital’s investment in Wagamama, one of the first PE forays into midmarket casual dining back in 1996. All three had clocked that hospitality ventures suddenly looked a lot like commodity futures or mortgage bonds. Under the cloisters of a private market, they could now buy, sell and most importantly, speculate.
Going all in on a gamble like Wagamama wasn’t necessarily a safe bet back in 1996. ‘We were sort of doing what venture capital should be doing,’ Graphite’s Markus Golser says of investing in Alan Yau’s ‘one and a half’ noodle shops. The lines snaking around the corner of Lexington Street were a good hint but Golser says initially, it was just a tiptoe into the space, all ‘to make sure you understood the genie you’d unleashed.’ Once they did, Wagamama was spun out via PE’s now infamous ‘cookie-cutter method’ to over 70 different UK sites and then eventually sold to another firm for £215 million. The model had already been pioneered in the States but in the broader European market, PE had found patient zero. By the new millennium, PE acquisitions in the British restaurants accounted for 80% of the European total, buoyed by the likes of ASK, Zizzi, Café Rouge, Carluccio’s and Busaba Eathai all changing hands in the middle rung while Johnson, Caring and Corbin & King’s lot traded wares further up the dining totem pole.
When the financial crash of 2008 hit, the era of easy-breezy lending was over. But PE wasn’t saddled with the same restrictions as the banks. Having stockpiled vast sums of dry powder by using LBOs instead of their own funds, they went nuts because as it turned out, guarding your pennies no longer meant staying at home for dinner. ‘People stopped seeing restaurants as discretionary [spending],’ says Nicola Sartori, head of Consumer Industries at Grant Thornton, who was shocked by how restaurants’ numbers held up against ‘apocalyptic’ retail ones. While the stereotype around millennials going out to dinner instead of buying houses was true to some extent, many ‘weren’t out of pocket in the way you might expect,’ says Golser. Tumbling interest, mortgage and credit card rates kept the sector afloat while ‘at the same time, social media started to pick up and Instagram became a thing and fundamentally, going out wasn’t the same thing as it had been before’.
‘It was absolute manna from heaven,’ says Sam Fuller, an M&A specialist at Houlihan Lokey, one of the biggest PE hospitality players in the UK, who began his career by flogging Carluccio’s in the early 2000s. The whole swathe of mid-market PE was tired of ‘lumpy’ tech sales after the dotcom boom and could suddenly generate 35% returns ‘almost without exception’ with pasta and pizza. ‘Suddenly, if you lived in, say, the suburbs of Lincoln, you went from having a choice of five independent restaurants of variable quality and a Wimpy to ten pretty good chains, one independent left and the Wimpy was gone.’ Graphite had sold Wagamama to another PE firm by 2011 but they doubled their footprint with new backers between 2012 and 2015. Exact numbers are tricky because PE is, well, notoriously private, but according to Golser, not so long ago, some ‘24 out of 25 of the UK’s largest restaurant chains were owned by PE’. And as Koya’s founder Shuko Oda put it, the likes of Wagamama made Britain understand that Japanese food wasn’t just sushi. PE made people expect more from their food. But there was a catch.
‘The small guys got smashed as a result,’ says Fuller. ‘It’s way, way harder to make it work as an independent. You need a portfolio approach. You need multi-location. The critical mass allows you to buy better.’ By 2014, high-end or low, everyone was buying – Corbin & King, Hawksmoor, Byron, Benito’s Hat, The Real Greek, Franco Manca and a dozen other groups all changed hands. This meant being leveraged with ever more debt and servicing that meant hitting the floor with rollouts, then jacking the prices up, not least because competition for sites was also jacking up the rents. ‘The private equity guys ended up playing a game of pass the parcel because as long as you could keep the myth going and flog it to the next clown, you were fine,’ says Andrew Fishwick, founder of the boutique PE fund Hestia.
Byron Burger and later GBK became the first in a steady stream of cautionary tales about fraying ledgers, not to mention their labour practices. ‘I knew Hutton Collins, who bought Byron and leveraged it on day one with £100 million’s worth of Luxembourg debt,’ Fishwick recalls. ‘It’s a real shame because the founder of Byron was a genius. He bought the first good American burger concept to the UK, grew it to 40 sites and was turning over £80 million.’ Many midmarket chains met the same fate via the same formula. £10–12 main courses were suddenly £17–18, corners were cut, the market was saturated and when the pandemic hit, everything went into a tailspin. But PE has a taste for distressed assets and with the weak post-Brexit pound, many big firms kept feasting from the trough, only to bite off more than they could chew. They were Fishwick’s ‘next clowns’.
Last year, the casual dining sector contracted by 4% while the year before that was the worst spate of closures in British history. Harden’s 2026 restaurant guide reports we’re out of the storm, but not everyone’s heard the news. ‘Candidly, I think there’s probably a period of survival for the next 12–18 months, hoping that the global macro gets a bit more benign and the UK consumer also just stops getting punched in the face,’ says Fuller. Apparently many of the bigger players like Apollo and Blackstone have called time. Over at Graphite, Golser and his team have been trying to sell Hawksmoor for three years with no bites as yet. ‘We were great beneficiaries of a very strong upward trend…[But] the money is now really focused on portfolio management,’ he tells me.
An increasing proportion of PE financing (around 57% of F&B deals back in 2023) is now directed towards minority stakes and consolidation bids (‘bolt-on deals’), rather than the leveraged deals that powered the industry for so long. PE companies are still forking out debt for fast-food outlets like Wingstop and Popeyes, but with both middle-ranking chains and premium offerings, they were burnt badly enough to know better, at least for now. PE may be the quintessential corporate pirates of our time, and certainly look as much in the wider economy. But restaurants aren’t the same as supermarkets like Asda or Morrisons in the UK nor restaurant chains like Red Lobster in the US. Try and asset-strip the London ones and what you’d end up with is a bunch of stoves, the glassware and maybe the linen. For the most part, they don’t own the bricks and mortar. The landlords do.
No wonder everyone sounds like startup kids. All they’re really trading off is a brand identity, IP and operations know-how – with even the most legendary grandees of the industry plotting their departure from the stage. ‘If Louis Vuitton came a-calling,’ says Jon Spiteri, ‘I would sell my mother’, and it’s not unlikely that they might. An LVMH subsidiary paid £300 million for a minority stake in Dishoom, and the company’s obscenely rich CEO, Bernard Arnault, has just bought Paris’s most famous brasserie, Chez L’Ami Louis. Spiteri admires that this final acquisition is more of a nice-to-have object for France’s richest man, more like ‘a handkerchief’ than a business concern. Unlike PE-driven cost-cutting and systemisation, Spiteri posits, this particular purchase enable iconic restaurants to retain their ineffable character. Apparently, the roast chicken at Chez L’Ami Louis is still great.
In London, these storied dining rooms are leaning into the prospect of an imminent purchase, even the stolid, unchanging St. JOHN – which another insider believes is being fattened for acquisition. ‘They want to be bought,’ they tell me, on the eve of the restaurant opening its seventh site in Covent Garden. ‘Trevor’s old and Fergus is ill, and it doesn’t make any sense for them to carry on. Right now, if someone comes along and offers them a pile of money at their age, they’d be fools not to take it.’ And with the surging overheads of just about everything else involved in running a restaurant, you can see the appeal of the exit strategy. ‘The going rent in Covent Garden is £240,000,’ says Margot Henderson. ‘And that’s before you paid your rates, your gas bills. It’s quite crazy. That’s the reason why you need a few restaurants, rather than one.’
There’s something to chains: they’re a place to be anonymous; to bring fussy children; to eat, pay and leave within the hour, depending on the speed of service. But with macroeconomic headwinds as they are, people resent them for driving up rents, pushing out independents and swamping British high streets with the same colour scheme. And the price-gouging. That said, there is no going back: Guy Hands, Luke Johnson and their ilk have turned a certain kind of restaurant into a commodity, and that’s how we still treat them. Increasingly, it’s how owners want to be treated. The only difference is whether those restaurants are plundered for profit – or patronised for pleasure. Still, it’s worth remembering that while the PE crowd have successfully commodified eating, hospitality is a slippier beast.
