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Profits at Gordon Ramsay's London restaurant empire collapsed by almost 90 per cent in his most “turbulent” year since starting in business.
The celebrity chef's latest accounts reveal just how close it came to running out of money last year because of over-hasty expansion, forcing him to plough millions of pounds of his own cash into his company.
The documents, filed at Companies House today, show that in Ramsay's financial “annus horribilis”:
* Profits at his London restaurants fell 87 per cent from £3.05 million to just £383,325.
* Turnover dropped 14 per cent from £41.59 million to £35.57 million. Four of his London restaurants closed between December 2007 and this January — the Savoy Grill, the Connaught, Petrus and La Noisette. The Connaught and the Savoy accounted for £9.5 million of annual revenue.
* Net debt ballooned from £4.01 million to £9.48 million, on which the interest payments doubled from £279,485 to £545,563.
* An unpaid backlog of VAT, corporation tax and PAYE reached almost £8 million and is only being repaid this month.
* Ramsay and his father in law and business partner Chris Hutcheson had to put £5 million into the business.
* The business breached covenants on loans with Royal Bank of Scotland because it was not generating enough revenue.
The crisis was the result of a dizzying expansion programme in 2007 and 2008 when Ramsay opened 10 restaurants in 10 months, many overseas.
Ramsay has admitted that “ambition overtook me, we thought we could do anything, that we could not fail”.
The chef managed to avoid going into administration — the fate suffered by fellow TV chefs Antony Worrall Thompson and Tom Aikens — because he is earning up to £10 million a year from his TV programmes, live shows and books, which he was able to redirect into the restaurant company, Gordon Ramsay Holdings (GRH).
But Ramsay was forced to sell his Ferrari and considered putting his £6 million family home on the market.
One adviser to the company said: ”The group was expanding at such a rate that it was sucking up cash to get restaurants off the launch pad. It's a classic symptom of a business in the growth phase.”
However, Mr Hutcheson, who owns just under a third of GRH, insisted that the worst of the crisis was now over and the London restaurants were back in good health.
Trading in the London restaurants this year is said to be “robust” and profits are expected to grow rapidly this year and particularly in 2010, once Petrus and the Savoy Grill are reopened.
New banking terms covering the next two years have been agreed with RBS this week. Mr Hutcheson, who is chief executive of GRH, said: “The structural changes that we have made within the group leave us well positioned for a strong trading year ahead.”
Menu of problems
What the accounts say about his 11 London restaurants in 2008:
Boxwood: “Best performance to date.”
Claridge's: “A strong performance.”
Connaught: Lease ended, closed
Murano: opened Sept 2008
York and Albany: opened Oct 2008
La Noisette: trading ceased Jan 2009. “Consistently underperforming.”
Maze: full refurbishment
The Narrow: “The way forward appears strong.”
Petrus: closed at old site September last year. Reopening new site later this year.
Royal Hospital Road: “Continued to set benchmark for rest of group.”
Savoy Grill: closed but due to reopen early next year.
Reader views (37)
Most of you sound like jealous twits! The man has worked hard for what he has achieved and simply expanded too quickly, and is fixing it. If you bothered to learn about the man at all besides what you see on "the tele", you might find that he isn't half of what his TV personna is. His staff is loyal which speaks to his personal character, and there is this little thing in TV land called editing that is done for a certain effect. You jealous dolts are way off base with your petty accusations, and should be embarassed.
- Steve, Chicago
Oh dear ..what a shame ..never mind .
- Vox Pop, Edison u.s.a.
He isn't the first businessman to overreach, won't be the last. All the personal animosity is amusing and sad at the same time.
A recession is when "money returns to the rightful owners" ?? Try telling that to the tax and spend Democrats in my country! Recession = more taxes around here. Mustn't lay off any gvt workers you know..
- Trunk, US
Having been unfortunate enough to chance upon one of his foul mouthed tv cooking lessons I'm surprised that he has not been thoroughly assaulted as well as impoverished by his repulsive activities. How standards have fallen - he wouldn't even have got away with his revolting behaviour as a new recruit in the Royal Army Catering Corps!
- Ralph Smith, Vancouver BC Canada
who cares??
A not very talented cook, who has made his fortune from bigging it up as a foul mouthed yob on TV.
If you need to swear all the time you don't have the intelligence or vocabulary to communicate normally.
I am fed up with Ramsey and his banality, I hope he goes under.
- Stuart, london
Somebody sagely defined a recession as 'when money returns to its rightful owners'. Interesting that the celeb. chefs are struggling.
- Paul, Kent
Once these chef idiots expand beyond their imagined capabilities ie greed; disaster strikes.
He "has to put his own money in to save company" ! What is so magnanimous about this ? They are his companies ! He caused the problems. Are the creditors supposed to pick up the bill ?
- Michael, Kensington, UK
Couldn't happen to a nicer chap.
- Dee Jay, Fleet Hampshire
My heart bleeds. If there is one good thing about having a recession it is that people think a bit more about where they spend their money.
Spending on unnecessary froth takes a hit, purveyors of froth take a hit. Common sense rules!
- Man In The Street, London, UK
I'm not jealous of him - I just don't like the cult of the minor celebrity all over my tv screen and newspapers - he cooks well; he swears a lot; his restaurants are not value for money for me when my business is struggling - so what.
- Jim, London
What he needs is a top celebrity chief to come to his resturant and tell him where he is going wrong and how to fix it. But where would he find one?
- Nj, London
Amazing how many people are so jealous of what Ramsey has achieved.
As someone who is a regular at his restaurants I admire him for putting £5 million of his own money into the restaurant rather than let restaurants go bankrupt and put hundreds of people out of work like a certain Anthony Worral Thompson did.
I wish these jealous people spent time working a little harder rather than spending the time moaning about those have achieved in life.
- Sean, London
Why anyone would pay to see some ding bat cooking a simple meal, I really don't know.
Oh! And by the way, would you mind keeping him your side of the pond. While he is here he might take time out to see a real chef, Matt Moran. Maybe he will, they're both at the good food show in Sydney.
- Ray, Sydney.
Mandy, Oops, it may be because whenever I see his face on the box, which incidentally looks like a quiche that has been put in the oven for an hour too long, I switch off. (I am sure though I once saw him on BBC).
- Patricia, LONDON
I bet the great majority of small businesses start with owner's capital, and many continue on that basis permanently: I know I do. If Mr Ramsey HADN'T put his own money in we'd know what to think of his business: putting your money where your mouth is isn't a qualification for sainthood, it's the basis of almost all worthwhile activity. I'm no fan of his, but he understands this point, which is to his credit.
When the 'scandal' broke about his central cooking factory, the low prices quoted made me wonder why he didn't just sell home-delivery meals, and cut out all the ritzy real estate and poncy waiters: that might be a really recession-proof business model that we'd all appreciate.Ramsey's Ready Meals-in your home! (Do your own swearing if required)
- Mdj E10, london uk
I remember a chef who specialises in travelling the world whipping failing restaurants into shape Now if I could only remember his name
- Ereed, Bournemouth,UK
Patricia - why bring the BBC into this? Gordon's contract is with C4!! Could you not think of a link to MP's expenses or Greedy Bankers?
- Mandy, London
He obviously believed he was a legend in his own mind, and vastly over extended his business. -Someone should have told him there's only so much mileage in being 'a cursing cook'.
- Huggy, Cumbernauld Scotland
Take away burgers all round for the contributors so far! They can consume them along with a sauce of small mindedness, jealousy and bitterness!
- Carl, London
Another foul mouthed muppet.
Serves him right.
- Reuben Camara, Republic of Morecambe, UK
We dined at The Narrow recently. It frankly was nothing special but adequate. Certainly not worth anything like the inflated prices that we were charged. my impression was that it was the sort of restaurant where people go to when they are not spending their own money.
- Duncan Thompson, London
This man is deplorable...vulgar and dispicable.
Would someone please slap him silly.
- Victoria, Cypress, USA
Well it went well for a while but it was all a lot of fuss about some meat and veg on a plate.
- Mr Pastry, Brisbane
"taxi for Ramsey !" no one cares you foul-mouthed spud basher.
- Squiz, Islington
Agreed Gary and also with Heston he has been known to cook in his own restaurant.
- Alex C, London
I was hoping the way he ran his private affairs may have put people off going to his restaurants. It's certainly put me off. I think the word Icarus can be applied to Gordon.
- Melanie, milton keynes, bucks
Oh, passe moi le baky beanys Gordon or "wots up wiv me nosh - tosh"! Swear word, swear word swear word. Wake me up when the recession is over.
- Never Eat Tuna Again, London
Hilarious: he's in such deep trouble that he needs to pump in £5m. At least he's GOT five million pounds to spare!
- Neil, London, London UK
so his company did go bankrupt... needing £5mio fresh cash from outside.
I imagine we'll see a far more contrite Big Sweary from now on in.
- Scott, London
Ever since restaurateurs decided to become brands, they have become completely over the top. I wish Gordon Ramsay would disappear off our television screens. Generally, we would not invite anyone into our homes and listen to a constant tirade of foul and abusive language so why do the television programme makers think that they can beam it into our homes? Oh yes the BBC do because they have a constant supply of cash and are arrogant enough to think that can dish up whatever they like.
- Patricia, LONDON
My heart bleeds. He's doing better than most of us and we grit and bare it! Deal with it you fool!
- Aria, South London
His foul mouth, over-inflated ego and general nastiness to everyone who comes close is going to be his downfall. The restaurants he still owns are shedding their stars. What goes around ...
- Neil, London
We are having to pay through the nose on taxes to cover for the bankers who stiffed us. Yesterday, we read that the rail companies are getting in on the act and walking away from their obligations and stiffing us for around £1 billion on the East Coast line.
Is the Government going to appropriately punish board members in these banks or rail companies - well not so far. Have we had enough yet - I think so.
We need to insist that BBC stops using our license fee money to pay for over-hyped "celebrities" promoting their business empires while we pay for the programmes to be made - scandalous really. At least on commercial channels companies pay to advertise - we don't pay them by kindly making the programmes for them to appear on.
- Jim, London
This foul mouth yob deserves all he gets
- Richard Edmunds, Rayleigh Essex
I detest this man. Luckily I have discovered the television remote which means he can soon be silenced.
why dont these chefo's learn, one or two restaurants good, 80-million = bad!? obviously he cant oversee ALL the eateries at the same time so standards slip and his food becomes an overpriced watered down version of the real thing. Bring on bankruptcy I say.
- Michael James, SW3
After showing everyone how easy it is. Gordon has lost the magic and shown everyone there is no secret ingredient (po). At least with Heston you get something total unique.
- Gary, Brentwood
Gordon should Practice what he Preaches aka "Ramsey's Kitchen Nightmares" also harping back to his Footballer days its about "Keeping One's Eye On The Ball"...I guess Gordon will need to reinvent himself and perhaps launch a line of Ready Meals and go for a Mass Market rather than a few who can albeit (can no longer) afford to dine at this overpriced establishments...
- Justice, London
