UK Restaurant Group Shuns Expansion at Home Amid 'Draconian' Taxes
Sam Morgan, CEO of Open Restaurant Group, expressed concerns about the "draconian" tax regime in the United Kingdom, citing high tax rates and complex administrative processes. As a result, the group has decided to focus expansion efforts on international markets like Dubai, where tax burdens are lower.
Morgan emphasized that the current tax environment "stifles growth" and criticized the "stealth taxes" imposed on businesses, such as fees for filing financial reports. He noted that his restaurant group pays a total of 37 taxes and fees.
Despite continued investment in existing UK locations, Open Restaurant Group will prioritize expansion in regions with more favorable tax conditions. Morgan believes it would be "reckless" to continue opening new restaurants in the UK due to the current tax regime.
Dubai has emerged as an attractive destination for the group due to its "extremely progressive" tax policies and growing dining scene. Morgan cited the strong presence of British expats (approximately 250,000) and the ease of doing business in English.
The hospitality industry in the UK faces additional challenges, including rising employer National Insurance contributions and minimum wage increases. Morgan estimates his company will incur an additional £76,000 in National Insurance costs, potentially leading to price adjustments.
He criticized the government's recent Budget for not addressing the long-standing tax burden faced by hospitality businesses. Morgan expressed frustration with both Conservative and Labour governments' policies, stating that he no longer sees the UK as a supportive environment for entrepreneurs and business owners.
In response, a Treasury spokesman emphasized the government's efforts to stimulate economic growth and provide tax relief for businesses. However, Morgan remains skeptical of the effectiveness of these measures in addressing the broader challenges faced by the hospitality sector.