City of London loses 14% of restaurants as work from home bites business lunch culture

Staff shortages and cost-of-living crisis add to economic woes in UK hospitality sector

Empty terrace tables in the sunshine outside one of the restaurants still open in the City of London. Bloomberg
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One in seven restaurants in the City of London have been forced to close since the start of pandemic as workers continue to shun the office in favour of working from home.

The lack of commuters has resulted in lacklustre weekday trade in the Square Mile as the traditional business lunch increasingly falls by the wayside.

At least 14 per cent of hospitality premises have been forced to shut due to a major decline in footfall, research by AlixPartners and industry tracker CGA indicates.

The drop is not restricted to the UK capital, with Birmingham also noting the number of licensed premises falling by 14 per cent and Glasgow hit by a 10 per cent reduction.

Before the pandemic, the City — London's historic commercial centre — attracted more than half a million commuters a day.

But the pandemic saw a boom in working from home and many employers in the area have adapted to hybrid working, often requiring only three days in the office a week.

Footfall has dropped by a third on some days during this summer compared with pre-pandemic levels, according to data from Google.

Many high-profile venues in London have been closed since 2020, including Mark Hix's Oyster and Chop House and Kym's, a venture by chef Andrew Wong.

One seventh of restaurants in the City of London have been forced to close since the start of the pandemic. PA

Restaurants, bars and cafes bore the brunt of stringent Covid-19 measures and must now grapple with a soaring cost-of-living crisis in which inflation is up to nearly 10 per cent.

Graeme Smith, managing director at consultancy AlixPartners, said “given the catastrophic events of the past two years, numbers have held up well”.

Profit has also been hit by staff shortages in the hospitality sector. Many of London's restaurant workers are from Europe but now require work visas after Brexit brought an end of freedom of movement.

Recent figures by the Office for National Statistics showed only 43,000 EU citizens received visas for work, family, study or other purposes in 2021.

That figure is significantly down from the 230,000 to 430,000 EU citizens coming to the UK annually in the six years to March 2020.

A report by the University of Oxford's Migration Observatory found that increased retirement among the over-50s and a tight labour market across the continent were also contributing to the problem.

“While it is clear that ending free movement has made it harder for employers in low-wage industries to recruit staff, changing immigration policy to address shortages brings its own set of challenges,” said Madeleine Sumption, director of the MO.

Low-wage work visa schemes are notoriously difficult to monitor and often open workers up to exploitation and abuse, she said.

She said "immigration policy is a bit of blunt instrument" when it comes to labour shortages and there was a "real trade-off between responding quickly and being evidence-based".

She said: “If the government wants a system that is evidence-based, it can’t be expected to respond at short notice to the latest crisis, whether the problem is airports, lorry drivers, the pork industry or something else.”

Updated: August 15, 2022, 11:36 AM