London Restaurants Open Gulf Branches to Offset High UK Taxes

Customers at some of London’s most popular dining establishments may soon find their favorite chefs operating across the water. Several high-profile restaurant groups have signed agreements to open branches in the Gulf region. The expansion comes as business owners point to rising domestic costs and favorable conditions abroad.

James Robson, co-owner of Fallow in St James’s Market, recently signed a deal to open a location in the Gulf. Fallow serves approximately 1,000 customers daily and has accumulated 650,000 followers on Instagram. The restaurant is known for specific dishes, including a whole cod’s head served in a spicy butter sauce. Robson identified East Asia, the United States, and the Gulf as his primary targets for future growth.

Fallow joins a list of established London venues that have already expanded into the Middle East. Scott’s of Mayfair has opened in Dubai, as have the two Michelin-starred Indian restaurant Gymkhana and the Chinese venue Park Chinois. The Borough Market bakery Bread Ahead has also opened a branch in Dubai, while the Mayfair restaurant Isabel’s has established a presence in Abu Dhabi.

These expansions continue despite regional conflicts. Earlier this year, the US-Israeli war in Iran led to bombardment in Dubai and a departure of many expatriates. Some venues are still recovering from the disruption. Dinner by Heston has remained temporarily closed since the war. The Michelin guide faced criticism in September for listing 16 restaurants that were closed, a result of inspections conducted before the conflict began.

The tax burden in the United Kingdom is a central factor in these decisions. The value added tax rate for hospitality in the UK stands at 20 percent. This figure is among the highest in Europe, where the average rate for restaurants is approximately 12 percent. Italy charges a 10 percent rate on food sold in restaurants. Restaurant owners are urging Chancellor Andy Burnham to reduce the rate in the budget scheduled for next week.

Robson stated that the UK has "sleepwalked into multiple anti-growth taxations" over the last two budgets. He expects further changes in the upcoming fiscal announcement. He also cited a 25 percent corporation tax rate and a dividend tax of at least 40 percent as reasons to seek markets where the balance of risk and reward is more favorable.

Chef Jason Atherton, who holds Michelin stars, now spends one-third of his time at his restaurant in Dubai. He noted that generating profit is easier in that market than in London. Robson said he does not resent contributing to the UK deficit but believes the domestic environment no longer supports sensible business growth. He plans to maintain a cautious approach in London while focusing on overseas opportunities.

Human rights groups have raised concerns about labor practices in the Gulf. Felix Jakens, director of campaigns for Amnesty International UK, said the United Arab Emirates has a poor record on workers' rights. He noted that migrant workers make up the majority of the population and are bound by a sponsorship system that ties them to their employers. These workers are denied the right to form trade unions.

Jakens urged UK businesses expanding into the region to conduct thorough human rights due diligence. He emphasized that kitchen staff must be treated fairly, paid properly, and allowed to raise concerns without fear of losing their jobs or visas. He added that the UAE’s spending on its image in the UK, including through Manchester City, should not obscure how workers are treated.