Profits at Gordon Ramsay’s UK restaurants plunged nearly 90% in a “turbulent” year in which the celebrity chef was forced to pump his own money into the business.
Ramsay’s latest company accounts show that the restaurant empire came close to the brink as revenues collapsed while debt and tax bills mounted.
The precarious situation caused the TV chef and his father-in-law and business partner Chris Hutcheson to inject £5million into the business.
Ramsay’s problems were blamed on ambitious expansion as well as the closure of key London restaurants like the Savoy as pre-tax profits tumbled from £3.05million in 2007 to £383,325.
The Savoy Grill was shut because of refurbishment at its host hotel, while the Connaught lease expired. The two restaurants alone accounted for a £9.5million fallin revenues.
A statement from the firm yesterday said that, after a restructuring of operations, it was confident the group had “successfully undergone change for the better” and was now “well-placed to grow its operation with a more stable capital base and a more manageable structure”.
Ramsay’s restaurant empire expanded “significantly” in 2007 and 2008, leaving the business vulnerable to the economic headwinds.
In the year to August 2008, turnover dropped to £35million from £41.6million the previous year. Meanwhile, net debt soared from £4.06million to £9.48million.
A full review of operations was instigated in December as part of a refinancing deal with the Royal Bank of Scotland and to help the business get through the troubled economic times.
The cash injection from Ramsay and Mr Hutcheson came after the firm accrued a bill from VAT, corporation tax and PAYE of around £8million. This will be completely settled by the end of this month.
Ramsay has told how he had to sell his Ferrari to help put the restaurant empire back on track, blaming its problems on his own ambitions.