What is the future of restaurants?

Tim Hayward explores what Britain’s hospitality sector could look like in the wake of coronavirus

Live Q&A

On Saturday May 30, Tim Hayward will be on ft.com at 12pm UK time to discuss the future of the restaurant industry. Please post your questions in the comments below.

I own a hospitality business in a small town. It was three days after the UK lockdown was announced — having signed the staff on to furlough, humped the contents of the walk-in fridges into the back of my car and delivered it to homeless shelters — that I finally let go. Throwing kilos of food into the bins, reality finally overhauled the adrenaline. I was weeping as I kicked dents in the side of the big recycling tubs.

I also write, 50 per cent restaurant criticism, 50 per cent about food in general — home cooking, food politics, supply, history, science and so on. That same shitty day, I filed what I imagine will be the last restaurant review I will ever write, at least in the form we currently know them.

I’m one of the lucky ones — and believe me, I know it — but everything I do is based in some part of the complex and diverse hospitality industry that, as we are increasingly coming to accept, will never be the same again. Even usually optimistic industry voices are beginning to admit that perhaps three-quarters of current restaurant businesses in the UK won’t survive lockdown and subsequent social distancing.

But 10 weeks down the line, a strange calm has settled. What has helped me is defining terms, looking at the different segments of what is glibly lumped into a single “sector”. We might all be engaged in the business of selling food, but within that there are important differences. It turns out that coronavirus is not the “great leveller” that some have said it is. We are all screwed, but we are not equally screwed.

By far the biggest employers in the industry, the McDonalds, Burger Kings, KFCs and Starbucks, are vast enterprises, often making much of their profits through franchising or property ownership. They are in the business of turning commodity ingredients into food-as-fuel at an industrial level. They offer reliable, never-changing products designed for instant gratification, using ingredients we’d sometimes rather not know about, turned out by staff who have no portable skills into the world of “restaurants”.

The toxic triangle of property, investment and catering businesses was always unsustainable

These places are unbeatable at what they do and with their hyper-efficient production regimes, scrupulous cleanliness, drive-through facilities and operators behind bandit screens, they should probably be doing brilliantly right now. It looks like the government is keen for them to reopen. The only problem seems to be staffing — finding anybody prepared to put on a paper hat and a nylon smock and come back to slinging food for minimum wage when they’re petrified and there’s furlough available.

Many commentators in the restaurant world seem worried that the fast-food giants will be the survivors at the expense of independent restaurants. That feels to me like a category error. There will never be a time when anyone stands outside an independent restaurant and makes an on-the-spot choice between that and Burger King.

I have no doubt that the fast-food chains will survive. How could they not? They have already expunged anything that feels like human touch from their transactions, they will probably still be serving as the last trump sounds, but I have no fellow feeling with them, no association, no similarities and they have no need of me.

Things weren’t always this way. If we go back 20 years, nobody spoke about the hospitality industry much and when they did, they meant pubs and hotels. Then something incredible happened: talented cooks started setting up restaurants in odd places. The function room over a Soho pub, a deserted smokehouse on the edge of an old meat market, a shabby boozer in Farringdon. Looking back, we call it a “renaissance”, but in truth it was a revolution. Chefs mattered, cooks mattered, they found places to serve, enthusiastic young people to work with and customers sought them out. None of them got really rich.

Sure, some chefs have made a lot of money through TV, book publishing or chains of restaurants, but the foot soldiers of the industry have not. The owners, the investors and, above all, in big cities, the landlords have become rich, but not the waiters or the hash slingers, who too often operate on minimum wage plus tips — a formula that has caused significant problems for staff accessing the UK government’s job protection scheme.

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Restaurants contribute £35bn to the UK economy, according to Ignite Economics. I can’t identify the key points when hospitality turned from being the thing you offered when you fed someone to a gigantic structure that enriches thousands of people who will never touch a greasy plate. But if you compare where we started with where we ended, something very radical has happened.

Restaurants have only recently — and for the first time in history — been funded like Silicon Valley start-ups. It wasn’t always true that, in order to afford premises, restaurateurs had to go to the kind of lenders that demanded instant returns. They didn’t have business models that demanded full dining rooms every shift, straight out of the blocks. They didn’t require the colossal PR and hype machine that feeds such demand.

What seems to have grown, in a very short time, inside our industry is something you could call a subsector — an intersection of property, investment and catering businesses, a toxic triangle — and it was always unsustainable.

When you consider the amount of change in the sector and the remarkably short period of time in which it has taken place, it has many of the characteristics of a bubble. And, unfortunately, the alarming speed at which it has deflated has many of the characteristics of bursting.

I have no desire to come across as some student union Marxist but, in recent years, this portion of our rackety industry has been force-fed like a cow on growth enhancers and milked for a surplus it could barely afford and scarcely sustain, even when things were going well. It couldn’t go on for ever and, while I won’t stand by and cheer, part of me finds it hard to deplore that that part of our world can’t come back.

Don’t get me wrong here. I’m not, by any means, predicting the death of the restaurant. Quite the opposite. I can’t see a future for any food business producing enough surplus to support many people beyond the kitchen and the dining room, but places that prepare food well, serve it honestly and offer it in exchange for money are a natural development of human nature.

Looking back, none of my best culinary experiences have been in highly financed restaurant “businesses”. They’ve all been in places with very few layers between diner and cook — skinny places, fit, wiry, driven by love of food and invariably not getting rich.

Of all the restaurants I have visited, professionally and for pleasure, one stands out above all the others. It was 2016 and I was on a job in New Orleans. The city had been trashed first by Hurricane Katrina in 2005 and then by the inept government response in the years that followed. As too often happens, it was pubs, bars, hotels and tourism that were hit first and hardest. The restaurant was in the Bywater district, just inside the levee and next to the river. You went through a corner wine shop, paid in advance for your meal through some kind of ticket system, then sat in the back garden, under jerry-rigged fairy lights, listening to live music, drinking and eating.

I think the food was coming from something that looked like a garden shed. The place must have broken every licensing, zoning, safety and hygiene regulation in the book — in fact, it was regularly busted and kept springing back. But it felt unbelievably warm and welcoming, a kind of living monument to the resilience of hospitality people or “hospos” as they sometimes call themselves.

I get choked up, even now, thinking about that place, brave, unstoppable in the face of legislative and economic adversities and a pure demonstration of hospitality. It’s a weird thought. If a restaurant consultant or an investor ever went near it, they’d probably use a buzzword like “agility”, but I don’t think any ever did.

The big players — the high-turnover, fast-feeding stations — will come through this OK. They’re too big to fail. The hospos will bounce back, finding gigs, “popping up”, making hospitality happen in the unlikely nooks and clefts of a damaged commercial property market — independents, newbies and start-ups, who are motivated by other things before modest profit.

But I feel most sorry for those who fall in between. Bright chains, dipping toes into business, borrowing to expand, “rolling out” and, frankly, about to lose everything. Twenty years ago, the business plan for a restaurant was written on a napkin. In the depths of lockdown, as everyone stares in cold terror at their figures, it’s apparent that anyone who had a responsible business plan going into this, a spreadsheet with customer numbers, food prices, income, rent and overheads, balanced and screwed down tight, is unlikely to survive.

It’s almost as if it’s the conjunction of “restaurant” and “business”, as we currently see it, that can’t be saved. Whether you see this as a bloodbath or a de-escalation of an overheated market depends on which side of the fence you stand. Unfortunately, I stand on both.

It’s worth reminding ourselves that London is enormously different to any other part of the UK. Its particular model of high rents/investors/hype doesn’t happen in most other British cities, where the restaurant scenes are still a little frontier-style. In cities with more mature restaurant cultures — such as Paris, Florence, Barcelona — it will be different again.

Let’s pause for a second here to remember something. When coronavirus was still something that only bothered bats, a big expensive chunk of the hospitality industry was already unwell. Several large high street chains had either closed their doors, sought expensive refinancing or were preparing shareholders for the worst of news. Many smaller restaurants in London were finding that rapacious landlords made their business unsustainable and there was increasingly acrimonious debate about staff pay relying on service charge. That’s a sobering set of co-morbidities to have on the clipboard at the bottom of your bed.

If you want to take the industry as a whole, then, yes, the prognosis is collectively bleak. It was weakened when the virus struck and it lacks the resources to weather the rigours of protracted intensive care, even if the government is willing to go on funding it. If we are allowed to reopen our businesses, we’re going to struggle to find staff who want to work. And then customers who want to visit.

But beneath that broad generalisation, there is space for hope and positivity. The human instinct to be hospitable is immortal, the spirit of individual “hospos” is indomitable and, though it’s going to be a tough and protracted recovery, we will get there. Things will look nothing like they did the day we shuttered our restaurants, but that’s not a wholly bad thing. I quietly hope that in a year or so I might have found a way to exchange money for food and something to criticise again.

Follow Tim on Twitter @TimHayward and email him at tim.hayward@ft.com

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