How a £3.8 Billion Merger Will Redefine Central London Restaurants

Two of the most powerful landlords in London have agreed a £3.8 billion merger that will define the futures of countless restaurants in the centre of the city. Shaftesbury, which controls much of Carnaby, Soho, and Chinatown, and Capco, which owns vast swathes of Covent Garden and the West End, will become Shaftesbury Capital, presiding over 2,000 commercial and residential rental units.

Capco already held around a quarter of Shaftesbury’s shares, after Shaftesbury shareholder Samuel Tak Lee (who also owns the Langham Estate and is a director in the powerful Fitzrovia landlord Mount Eden) sold his stake in June 2020, and Capco then injected £65 million in October of that year, right when having a large amount of expensive, empty real estate not taking any rent became something of a problem. Following this merger, Shaftesbury shareholders will own 53 percent of the group, with Capco’s owning 47.

Their restaurant tenants described Shaftesbury and Capco’s records as mixed during the COVID-19 pandemic. Some groups with healthy neighbourhood presences benefited from attractive rent deals, while both landlord’s role in outdoor dining schemes and their promotion benefited restaurants in warmer months. Longer-standing tenants in Chinatown, however described a lack of transparency over rent deals, with treatment allegedly being shaped by to what extent each restaurant embodies the landlord’s longstanding commercial objectives for reshaping the area.

This is the lesser-known result of the merger. Rent prices and premiums (the one-off fee to acquire a lease) are set and paid; terms are defined by contracts. But Shaftesbury and Capco’s impact on central London restaurant culture doesn’t just extend to checks and balances. Owning such a vast amount of prime real estate — mitigated in Soho by the presence of Soho Estates — permits landlords to act as “tastemakers.”

They don’t just do this by choosing dishes, target markets, and menus when deciding who to let in to the fiefdom; they also do it with money. Rents and premiums aren’t just simple financial barriers, because they also indirectly restrict the pool of possible openings to restaurants who are investor-palatable before any application has taken place. Investor-palatable restaurants tend to be new restaurants that look like existing successful restaurants, and so goes homogenisation.

Consider how many newish, high-profile Soho restaurants, whatever the cuisine, look, read, and eat the same. Consider the deliberate reconfiguration of Chinatown into a TikTok-optimised, mono-dish playground of bubblewaffles and fried chicken, while Cantonese institutions that nobody wanted to disappear are forced to shut up shop. This isn’t really about whether these restaurants, old or new, are worse or better; it’s about the extent to which landlords get to define who has a hope of opening, thriving, and surviving.

Shaftesbury and Capco, soon to be Shaftesbury Capital, say that “by combining both companies’ strengths, cultures and values as well as their proven operating and investment models, the combined group’s management team will take a ‘best of both’ approach to operations with the aim of delivering long-term economic and social value for all stakeholders.”

There is no doubt that cold, hard cash will be made. But the impact on central London restaurant culture will be slower and less tangible, revealed in restaurants that go unrealised as much as those that move in to vacant units. Central London’s restaurant culture now has a price. What the cost will be remains unknown.