Top London venues faced with a sharp drop in footfall in the UK capital have turned to crowdfunding to survive as government support packages fail to cover steep overhead costs.
Camden’s Jazz Café, the 150-year-old Holloway pub The Lamb and the India Club on the Strand, founded around the time of Indian independence and linked to India’s first prime minister Jawaharlal Nehru among others, have launched crowdfunding campaigns to raise cash to see them through the latest lockdown.
The popular Hackney restaurant Pidgin and longstanding Soho heavy metal venue Crobar, which is looking to reopen at a new site after landlords refused to make allowances on rent, have also turned to crowdfunding.
Crowdfunder, one of the UK’s largest crowdfunding platforms, said it had launched 227 campaigns for pubs or restaurants since the beginning of the coronavirus crisis, 95 of them for London venues.
With pandemic restrictions keeping international and domestic customers away and forcing venues to close or limit sales, pubs, bars and restaurants have had revenues cut off.
Phiroza Marker, manager of the India Club, said the pandemic “has completely crippled our business. We are very appreciative to the government [for support] but it’s really not enough to carry on.”
Marker, whose family has owned the restaurant and hotel near London’s Strand for 24 years, said revenues had dropped 90 per cent last year and that they had been forced to slash hotel prices to a tenth of their previous rates.
Alongside £16,150 in monthly running costs, the India Club is also facing a costly legal battle with its landlord who wants to reclaim and redevelop the site.
So far, the business has raised £30,600 of a £100,000 target and Marker said she had been “very surprised” by the support.
Rob Love, co-founder of Crowdfunder, said that “funding comes directly from supporters who are emotionally invested in the success of the project”, adding to its appeal as a route to funds.
Without more cash, many businesses face administration or closure. Café de Paris, a 96-year-old nightclub in London’s West End shut its doors for good in December, while Mayfair’s Conduit Club, which counted former Unilever boss Paul Polman among its members, closed in October after it failed to agree a financial restructuring with lenders.
Many in the sector fear a cliff edge at the end of March when support measures including VAT relief, a business rates holiday and a moratorium on eviction for non-payment of rent will stop.
“That will be the litmus test for the health of the industry for the next two to five years and everyone is slightly bracing themselves for the worst,” said James Ramsden, co-founder of the restaurant Pidgin, which raised £69,900 in December.
Before the pandemic, crowdfunding had become more common among hospitality businesses looking to expand.
But despite being an accessible way for small operators lacking professional investment to raise money, crowdfunding has exposed some businesses after they promised backers rewards that they were unable to deliver.
Graziano Arricale, operating partner at private equity group Oakley Capital, warned there was “a risk” that consumers could lose out as they buying into something “that may not be redeemable for months and the business has to be there in that time”.
Arricale and his business partner James Hitchen bought the 45-year-old London brasserie Langan’s out of administration in December. They plan to refurbish and reopen it later this year.