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08
Mar
Why do so many Harrogate restaurants fail, and what's the secret to success?
Every restaurateur knows there’s an appetite for good food in Harrogate, but many of them, it seems, can’t quite get the recipe right.
To illustrate the point, we looked at the 56 restaurants in Harrogate that were given five-star hygiene ratings by the Food Standards Agency (FSA) in the summer of 2018. We chose these because the high standards these establishments have set and attained might suggest they should be more likely than others to succeed: if they’re good enough to get five stars, maybe they’re good enough to stay in business.
But incredibly, less than seven years later, more than one in three of these have shut down.
The roll-call of defunct eateries is peppered with some familiar local names – the Damn Yankee, Nutrition Joe’s and Lucia’s – and several national chains: Byron Hamburgers, ASK Italian, Bistrot Pierre and Carluccio’s.
It sometimes seems that not a month goes by without some new restaurant opening in Harrogate, usually on the site of one that failed.
For diners, this ever-changing landscape might suggest a dynamic dining scene, but for hospitality entrepreneurs, it’s simply an industry fraught with danger.
So why do so many good restaurants go under – and crucially, what’s the secret to survival in a cut-throat market?
Jez Verity has owned Andalucian chicken restaurant La Feria on Cold Bath Road for nearly a decade, so might be expected to know, but he told the Stray Ferret:
If I had the answer to that, I’d be Nando’s by now! There is no magic formula.
You just need a really great offer, a really great team, and you need to ensure the consistency of that offer and hope that people enjoy what you enjoy.
La Feria on Cold Bath Road.
It sounds easy, but if it were, we surely wouldn’t have seen the ‘churn’ of restaurants that we have in recent years.
Tough business
The fact is that hospitality businesses are being squeezed from several different directions, and not all of them have the operational resilience to survive – a point Mr Verity concedes. He said:
It’s a tough trading environment for all business on the high street, but especially so for hospitality. There have been so many challenges over the last few years, from the pandemic, to staff shortages, food cost inflation and the impending changes to employer’s national insurance contributions [from 13.8% to 15%] and the reduction in business rates relief [from 75% to 40%].
So we have to be resourceful, proactive and constantly adapt in order to survive and thrive.
But there are even more challenges than the ones Mr Verity lists. Just down the road, David Straker has run William & Victoria’s for 32 years. He said:
Three years ago, we were paying £1,700 per month on average on electricity. Now it’s £3,400. Just how do you absorb that? But you have to – you don’t have any choice.
We shop around and get the best deals, but the problem is that hospitality is considered a high-risk industry, so some utility companies won’t touch restaurants.
Another cost that weighs heavily on restaurants is VAT on food. It’s currently set at 20% – far more than Ireland’s 13.5% – but during the Covid pandemic was lowered temporarily to 12%, which Mr Straker said was a “game-changer”. He said:
Booze is not so bad – you buy it with VAT, you sell it with VAT. But when you buy raw food, it’s zero-rated. Then when you cook it, it’s liable for VAT, so you can’t claim anything back on it.
Your quarterly VAT bill about the biggest thing you have to deal with.
William and Victoria - commonly known as Will & Vic's - on Cold Bath Road.
Finding the right people
Another area many restaurants struggle with in Harrogate is staffing. The absence of large numbers of young adults in the town – and the lack of people to fill the gaps since Brexit – mean that finding suitable candidates can be tricky.
Dino’s Mediterranean on Station Bridge has only been open for five weeks, so has not yet encountered most of the problems that more established businesses have had to contend with. Manager Mahoo Ekti says rent and rates are very high – he jokes that “some landlords seem to think that Harrogate is heaven, with gold everywhere” – but he says that finding the right personnel has been the only real difficulty so far.
He told us:
The majority of people in Harrogate don’t want to work in hospitality, so we have to recruit from Leeds.
You maybe get 200 people applying and we ask 10 for interview. But then we get 16- and 17-year-olds asking for £14-15 per hour – without experience!
He stresses, though, that his staff are paid a fair wage, and keep all their tips, which not all restaurants allow.
Mahoo Ekti of Dino's Mediterranean.
At Will & Vic’s, Mr Straker has fewer such concerns – he has a tight-knit team with more than 100 years’ experience between them – but he said:
What’s been interesting over the last few months is that staff from other restaurants have come to us looking for jobs, because they can’t get enough hours. Payroll is the biggest cost, so restaurants are cutting back.
All in all, it’s a hard business to be in – a fact Mr Ekti, whose restaurant is new but who has 30 years’ experience in the industry, is well aware of. He said:
Restaurants should be making 30-35% profit on takings, but I don’t think anyone’s making more than about 15-25% these days.
It’s tough. The restaurant business is really sensitive. If you’re going up, you go up slowly, step by step, but if you’re going down, you go down quickly.
What's the secret?
But if the challenges are the same for all hospitality businesses, why do some “go up” and others “go down”? What are the successful ones doing that the other third are not?
La Feria’s Mr Verity said:
It’s difficult to say. There are lots of ‘moving parts’ in a restaurant; offering great food and wine is just a small part of making a restaurant a success. Restaurateurs really do need to be adept at many disciplines in order to be successful.
Mr Straker said success was dependent on “the whole package”: the food, the service, the ambiance, and the consistency of quality. He added:
Also, to me, 2025 is about managing costs. It’s not so much about what’s coming in – trade is still OK – it's about what’s going out. Every month we do the stocktaking and management accounts so that we’re on top of everything, all the time.
As for warning signs, it’s difficult to look from the outside and say who’s right or wrong, but I suppose when you start doing offers, that could be one. Then again, it’s only a small town, so maybe you might need to do offers.
For Mr Ekti, it boils down to a simple recipe. He said:
It comes down to the quality of the food and the quality of the service. You have to trust yourself, and you also have to trust your food, your service and your chefs.
It might be understandable if there was a shortage of entrepreneurs willing to chance their arm in such an unforgiving industry, yet closed-down restaurants never seem to stay empty for long.
Advice for start-ups
So for all those budding restaurateurs about to enter the market – or thinking of it – what’s the best advice to ensure their business doesn’t become just another casualty?
Mr Straker said:
Don’t do it – it's hard work! It’s getting harder to start up and sustain yourself. I don’t know how you do it now without deep pockets to bankroll it.
But if you do, you’ve got to give it everything, and you’ve got to enjoy it.
It’s very personal. This whole business to me is very personal, because it’s what we do. You’ve got to have that passion. It’s not a game.
Mr Verity added:
Have a clear business strategy, be authentic and never compromise on quality. It’s long hours and hard work, but also incredibly rewarding.
I wish anybody opening a restaurant the very best of luck.
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