Gordon Ramsay's 'brand' goes off the boil

Published on Thursday 2 July 2009 21:51

HIS expletive-strewn shows continue to attract millions of viewers and his books are still being reprinted at a dizzying pace.

But just as even the best recipes can go awry, the staple of Gordon Ramsay's business empire has gone off the boil.

Profits at the celebrity chef's group of British restaurants plunged nearly 90 per cent last year, prompting questions over whether he will be able to maintain the portfolio of upmarket eateries.

Food writers told The Scotsman the "Ramsay brand" has suffered in recent months, and pointed to the "slow and gradual decline" as the Renfrewshire-born restaurateur focused on his media work.

Accounts filed by Gordon Ramsay Holdings Ltd reveal the firm skirted dangerously close to the brink as revenues collapsed, and debts and tax bills mounted. Pre-tax profits tumbled from 3.05 million in 2007 to 383,325 last year, with turnover falling by 14 per cent to 35.6m. Net debt more than doubled from 4m to 9.48m, with interest payments up from nearly 280,000 to 545,000.

However, his estimated 10m earnings from his television work and books helped make up for the dip in profits in his restaurant business.

Earlier this year, the 42-year-old conceded that "ambition" and "tenacity" nearly heralded the demise of his restaurant empire, and he was forced to sell off several of his interests.

Nevertheless, he is pressing ahead with expansion plans, with a new London restaurant to open later this year, along with two in Italy.

The precarious situation at the holding company saw Ramsay and his father-in-law and business partner Chris Hutcheson inject 3.5m and 1.5m into the business respectively.

The fall in profits was blamed on the closure of key restaurants in London. The Savoy Grill was shut because of refurbishment at its host hotel, while the lease at the Connaught expired – these two alone accounted for a 9.5m drop in revenue. His London restaurants La Noisette, Petrus and Savoy Grill closed, though the latter two are scheduled to reopen in different locations.

Internationally, the Maze in Prague, Gordon Ramsay au Trianon in Paris, and Gordon Ramsay at the London West Hollywood have been sold.

A full review of operations was instigated in December as part of a refinancing deal with Royal Bank of Scotland. The cash injection from Ramsay and Mr Hutcheson came after the firm accrued a tax bill of about 8m. This has now mostly been repaid and will be fully settled by the end of this month.

The firm said 25 staff were axed as part of restructuring.

Ramsay said last night: "We have regrouped and learned some valuable lessons and the business has now returned to a position of strength. We are back on solid ground and I am very confident we have a bright and profitable future ahead of us."

Helen Hokin, executive editor of online culinary magazine foodtripper.com, said: "Gordon Ramsay has taken a lot of damage over the past eight months. His brand has been dented, and perhaps people are voting with their feet.

"People know that a Ramsay restaurant has a certain level of food and service, and I think he still delivers on that."

Pointing to recent publicity over Ramsay's use of pre-prepared food at his gastropubs, Ms Hokin added: "There's nothing wrong in self-promotion, but maintaining integrity is vital."

Closed or sold: where all the damage was done

&#149 La Noisette

Trading ceased in January 2009 at this Knightsbridge restaurant, described as a consistently underperforming site. The group agreed with landlords to vacate on 30 June, removing "the impact of future losses" from the business.

&#149 Savoy Grill

This formerly successful restaurant on the Strand in London has been closed since 14 December, 2007 while the historic hotel is renovated. It is set to reopen early next year.

&#149 Petrus

The restaurant is due to reopen later this year in Knightsbridge. Its lease expired for its previous site in September 2008.

&#149 Connaught

The Angela Hartnett at the Connaught, considered one of the jewels in the crown of Ramsay's restaurant empire, was closed in September 2007 after the lease expired.

&#149 Maze

Ramsay sold his restaurant in Prague – Maze at the Hilton in the city's old town – back to the hotel in February. Gordon Ramsay Holdings continues to offer support to the establishment with regard to menu planning.

&#149 Gordon Ramsay au Trianon

Ramsay's first restaurant in France, which opened last year, was sold in March to the Hilton hotel chain, owners of the Trianon Palace Hotel in Versailles.

In a similar arrangement to that at his former Prague restaurant, Ramsay is still involved in menu development.

&#149 Gordon Ramsay at the London West Hollywood

Although the celebrity chef hoped it would help him break the United States, Ramsay sold his LA restaurant in March to LXR Luxury Resorts, owners of the London West Hollywood hotel. Again, Ramsay has creative control over aspects of the way the restaurant is run.