Monday August 17, 2009
As well-heeled diners went into hibernation, four of Mr. Ramsay's high-profile restaurants -- in Los Angeles, New York, Paris and Prague -- "were starting to hemorrhage" cash last year, Mr. Ramsay said. He breached terms on £10.5 million, or $15.7 million, in loans that were partially backed by his personal fortune. An auditor recommended his company, Gordon Ramsay Holdings Ltd., file for bankruptcy. Mr. Ramsay sold his Ferrari and considered unloading his multimillion-dollar London home.
"All of a sudden, this whole thing was nothing to do with cooking," Mr. Ramsay said in an interview from the Los Angeles set of his show. "I had my own personal nightmare."
Now, Mr. Ramsay is being forced to restructure. The 42-year-old chef has exited Prague and handed back ownership of the kitchens in Los Angeles and Paris to the hotels they are housed in, though he still supplies the chefs and menus. He has fired about 15% of his roughly 1,200-person staff and is swapping out rib-eyes for cheaper cuts like shank and brisket. Mr. Ramsay and his father-in-law have plowed £5 million of their own money into the business.
The tousled-haired Mr. Ramsay runs one of the biggest global networks of expensive restaurants, with 20 outposts from New York to Tokyo. During the boom of the past decade, Mr. Ramsay amassed 12 Michelin stars, making him the third-most-decorated chef behind France's Joël Robuchon and Alain Ducasse. His success helped Britain put to rest its reputation as a culinary backwater and win a reputation as a serious destination for foodies.
The super-chef's current troubles illustrate the intense pressure facing high-end restaurateurs these days. Diners are eating out less often and spending less when they do, particularly on wine and spirits, where the fattest profit margins are. Corporate entertaining, which can account for as much as a third of a luxury restaurant's business, has fallen sharply.
Annual revenue growth in the roughly $1.5 trillion global restaurant industry is expected to slow to 1.1% this year, down from 4.9% in 2008, according to London-based research firm Datamonitor Ltd. The figures include restaurants, cafes and fast-food chains, but industry insiders say the priciest restaurants are among the hardest hit.