There’s no getting around the fact that landlord-tenant relationships can be fraught, not least in the competitive world of the London property market. Landlords want to see reliable, long-term returns on their sizeable investments, while operators just want to succeed. The length of leases is one area where these tensions come to the surface.

The length of a lease has a big impact on a restaurant's finances. Shorter leases might be preferred by some operators with the buying power to test the market, or those looking to relocate and stay flexible, but for greater stability many prefer long lease agreements. These offer a stable platform upon which to build, but are getting harder to come by. 30 years ago, 15–20 year leases were commonplace. Now, a 3-year lease feels de rigueur. 

In times of global economic uncertainty, the risk of a failed restaurant is high.  Landlords – particularly in cities – are relying on full restaurants to deliver healthy returns. But does the spectre of financial success make for a better restaurant environment, and how can such unrelenting pressure lead to an equitable workplace?

Despite the challenges, there are green shoots of hope, coming from unlikely places.

Two of London’s biggest commercial landlords, The Crown Estate and Shaftesbury, have had their fair share of criticism laid at their door, particularly during the pandemic. Yet, through conscientious choices around the leasing and financial support of their restaurant spaces, some of central London’s best restaurants have flourished. 

'They had the power to take the gamble on us,' begins Will Murray, chef and co-founder of the immensely popular Fallow, and its offshoots FOWL and Roe, when speaking of his landlord in St James’s Market, The Crown Estate. 

'When you speak to them, what you realise is they are thinking about the estate 50 years in the future, so they want to invest in new talent and new sites.'

Fallow’s early success might very well be, at least in part, attributed to the patient understanding of this behemoth landlord. In the early days, Fallow had successful pop ups across town before a long-term residency at the incubator site of 10 Heddon Street. The pandemic forced lockdowns and closures, leaving the nation’s restaurants in limbo. In many cases, landlords continued to demand full rents from shuttered businesses, leading to closures. 

But the Crown Estate could clearly see the potential of Fallow to deliver more. In Murray’s own words, 'When the former Duck and Waffle site came up, we worked with the landlord and Crown couldn’t have been better.' 

After such tumult in the market, many would expect landlords to push for immediate openings and to start generating rent, but Fallow signed an uncommonly long 15-year lease with a built-in rent-free period at the start, and a contribution from The Crown Estate for a kitchen and restaurant fit-out. 

This vital support gave the young team the headroom they needed to create what is now a hugely profitable business which, in turn, can provide better staff welfare, even with its contractual obligation to open everyday. 

'I see my job as keeping the restaurants as busy as possible by keeping the menus as good as possible. We need to be open 7 days a week but we put a huge amount of time and investment into our team. The busier we are, the more profitable we are, and that in turn drives an equitable team.' 

Fallow operates a staff rota of impeccably high standards. Chefs work 3.5 days on, 3.5 off, and despite things being full on, in Murray’s own words, 'the team have a lovely 48 hour week and…we never call our chefs on their days off!' 

In fact, the early support from The Crown Estate has allowed talent to flourish at Fallow, with staff running their own restaurant concept pop-ups in neighbouring FOWL. 

Murray mentions that there is an expectation of his staff to create their own restaurant concepts, with names, menus, branding and a mini-business plan, fully costed. They then trial these concepts during under-the-radar events and friends and family dinners at FOWL, stress-testing both the creativity and the financial acumen of their budding cooks. Murray noted, 'Our kitchen porters did a Senegalese evening. It put this positive pressure on the team to create something totally new. The initiative gives them time to plan and to be honest, it was one of the best ones we’ve done.' 

In a way, the leadership at Fallow has emulated the best practice of The Crown Estate’s restaurant incubator spaces, such as 10 Heddon Street. This desire to give space to new concepts can drive a new kind of restaurant system, where the landlord-tenant relationship actively invests in the future of the industry.

Restaurant expansion in such uncertain and expensive times can be tricky. Filipino spot Donia in Kingly Court, Soho, is traversing this path, and its new site is supported by the efforts of a genuinely engaged landlord, Shaftesbury. 

Chef patron and owner Florence Mae Maglanoc begins, 'From early on, they’ve really believed in a lot of my concepts. [The relationship] is not just them wanting to fill sites and collect rent, I get the sense they really want to curate certain areas of London.' 

The new site will be something totally different for Soho: a Filipino bakery by day and a restaurant space by night, hosting supper clubs, residencies and pop-ups. An incubator, perhaps something akin to Carousel, this ambitious project from Magnaloc’s newly-created 1996 restaurant group required a little help from Shaftesbury. 

'They gave a contribution to the fit out, and a rent-free period. Overall, it's a big 24-month package. The project had a huge delay, as we had so much going on with Donia, and [Shaftesbury] really understood.'

The Donia founder continues, 'They were incredibly helpful in terms of managing payments for rents, spreading things out, just really ensuring that we could run the business and not hurt the cashflow. They have been so understanding.'

It's this level of understanding a restaurateur needs, engaging with them on a personal level and offering tangible help that can provide sustainable growth for restaurants and strengthen the capital as a world-leading dining destination.   

It’s clear then that an open, honest relationship with landlords is an essential element of any successful restaurant. But when it comes to the bottom line, that's far from the only issue. In fact, restaurants have never faced more challenges. 

A seemingly indifferent set of government policies has raised the cost of doing business to levels that disincentivise restaurateurs and make growth harder.  

David Moore, founder of the Michelin-starred Pied à Terre, details these rising outgoings. 'It’s stamp duty, VAT, wine duty, tax, the decrease in threshold for National Insurance, business rates increasing, licenses and fees: suddenly a 10% net profit which wouldn’t be bad gets halved.' 

It’s a problem felt by Will Murray of Fallow, FOWL and Roe, exacerbated by his near 250 staff headcount. 'Our issue isn’t actually with landlords right now, our biggest issue is the staff bill that this latest wave of NI expenses is costing.' He continues, 'Along with the price of oil, the price of butter…everything is getting more expensive and there’s no olive branch of making it easier.'

These myriad, growing financial pressures could mean the demise of the small, self-funded restaurant opening. Florence Mae Maglanoc mentions that for her new Soho site, upwards of £200,000 has been invested, with Will Murray noting 'every penny from the business got re-invested into [opening] Roe.'

Landlords are uniquely placed to help curate London's restaurant scene. They are the invisible tastemakers, wielding power over a city's streets, shaping what we can eat. All the operators we spoke to expressed how an active, engaged and positive relationship with their landlord was a contributing factor in securing financial stability. While the hospitality industry has a responsibility to raise standards and support their staff, landlords have an equal responsibility to encourage a climate that supports their tenants and helps young chefs thrive.

As Sally Abé said in the very first of these articles published by Great British Chefs: 'When it comes to raising standards in the industry, this is something that needs to come from the top.'

This requires a mindset change. The goals of commercial landlords must move away from purely short-term profit-driven motives and focus on curating a line-up of spaces which foster the next generation of chef-led talent. This in turn will help ensure the future of restaurants in London and the UK's position as a world leading destination for food.