Ramsay Loss Almost Doubles on Cost of U.S. Pullback
Gordon Ramsay Holdings International Ltd., the company that groups the U.K. television chef’s newest restaurants, almost doubled its loss in fiscal 2009 following his troubled entry into the U.S. market.
The net loss for the 12 months ended Aug. 31, 2009, widened to 8.32 million pounds ($12.9 million) from 4.32 million pounds a year earlier. One-time costs climbed to 5.81 million pounds from 849,510 pounds as the company wrote off the investment in venues in New York, California and Florida. The operating loss narrowed to 2.45 million pounds from 3.47 million pounds.
Ramsay, 43, has abandoned ownership of his non-U.K. eateries and now operates them as consultancies after the popularity of his TV shows failed to translate into profitable dining businesses. Gordon Ramsay at the London in New York and the outpost in West Hollywood both proved costly, while Ramsay is no longer connected with Cielo at the Boca Raton Resort, a restaurant that was overseen by his protegee Angela Hartnett.
“While we expect economic conditions to remain challenging, structural changes that were made early in 2009 within the group leave us well positioned for the future,” Chris Hutcheson, who heads Ramsay’s restaurant businesses, said yesterday in a statement accompanying the accounts. Hutcheson is the father of Ramsay’s wife, Tana.
(Ramsay holds two Michelin stars each for Gordon Ramsay at the London, in New York, and for Gordon Ramsay au Trianon, outside Paris.)
New York Venue
The company previously has said that losses at the London hotel in New York reached $4 million a year, with a unionized staff costing 80 percent of revenue.
“We weren’t unlucky,” Hutcheson told Bloomberg News last year. “We were clumsy. We’d put too many risks in front of us, with too much confidence that nothing would fail.”
There was better news for Gordon Ramsay Holdings Ltd., a separate company that groups the chef’s longer-established U.K. restaurants, including the three-Michelin-star Restaurant Gordon Ramsay and Gordon Ramsay at Claridge’s, which has lost its star. (Gordon Ramsay Holdings International covers eateries and operations that have opened since September 2007.)
The company posted net income of 515,373 pounds, compared with a year-earlier loss of 100,063 pounds as it cut costs and closed La Noisette, a Knightsbridge establishment on what the restaurant operator called “a consistently underperforming site.”
Consolidated earnings before interest, taxes, depreciation and amortization in the first 10 months of 2010 jumped 70 percent to 4.2 million pounds. In an interview with Bloomberg News in December, Hutcheson estimated Ebitda of 7 million pounds to 8 million pounds for the full year.
When Gordon Ramsay Holdings International released its 2008 earnings in January, the forecast was similarly upbeat.
“The 2009 accounts for Gordon Ramsay International and Gordon Ramsay Holdings together will reflect a robust year of trading and an emphatic return to profitability,” a statement said.
Revenue at Gordon Ramsay Holdings fell to 30.9 million pounds from 35.6 million pounds because the Savoy Grill was closed while the Savoy hotel is being refurbished. The company also cited lower consumer spending for the decline, saying the combined effects depressed sales by 5 million pounds.
Sales fell 1.5 percent at the flagship Restaurant Gordon Ramsay, 4.6 percent at Claridge’s and 17 percent at Boxwood Cafe, which has since closed. Sales at Maze increased 44 percent, following the addition of Maze Grill.
Among the newer London venues, Murano and Plane Food both returned a trading profit, the group said, without disclosing numbers. At the York & Albany, “Occupancy levels, covers and ultimately the resultant revenues have not been as envisaged.”
The group has paid off tax arrears and Royal Bank of Scotland Group Plc has extended loans until 2014. Capital repayments were to recommence in February, the company said.
Jason Atherton, who created the profitable Maze chain, quit in April. He was followed out by his successor at Maze in London, and then by the chef at Maze in Cape Town, which was then ejected by the One & Only hotel in which it operated.
The group said that the closure of the Devonshire pub and of GR Logistics, a central kitchen serving some of the eateries, should improve the outlook, while the opening of a restaurant in the City financial district and the reopening of the Savoy Grill later this year should help to raise profit in coming years.
(Richard Vines is the chief food critic for Muse, the arts and leisure section of Bloomberg News. Opinions expressed are his own.)