'Turbulent' year for Gordon Ramsay as profits dive 90%

(Getty Images)

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 up.

The precarious situation caused the TV chef and his father-in-law and business partner Chris Hutcheson to inject the business with £5 million.

Ramsay's business problems were blamed on ambitious expansion as well as the closure of key London restaurants like the Savoy as pre-tax profits tumbled from £3.05 million 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 £9.5 million reduction in revenues.

A statement from the firm today 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 overall 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 £35 million from £41.6 million the previous year.

Meanwhile, net debt soared from £4.06 million to £9.48 million.

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 £8 million. This has now mostly been repaid and 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.

Mr Hutcheson said: "2008 brought its own challenges, not just for our group, but for the industry as a whole and the broader economy.

"Whilst the restructuring has benefited the group, the significant contribution and commitment of all 750 staff to the business has been integral to moving us to a position of strength."

The firm said 25 staff were axed as part of the restructuring efforts.

Of Ramsay's 11 London restaurants, Boxwood, Royal Hospital Road and Claridges emerged as the star performers.

Connaught was closed after its lease expired, but two further restaurants were opened: Murano in September 2008 and York and Albany in October.

The Narrow has had extra seating installed, Petrus is due to move to Knightsbridge later this year after closing last September, Maze has been fully refurbished and Savoy Grill is set to reopen with the hotel in early 2010.

But La Noisette ceased trading in January this year and was described as a "consistently underperforming site".

News of troubles in the Ramsay restaurant empire comes amid a torrid time for the TV chef.

Knives were out for the 42-year-old Hell's Kitchen star after he reportedly called Australian television star Tracy Grimshaw a lesbian and compared her to a pig in front of a 3,000-strong audience at a live cooking show in Melbourne last month.