Restaurateur hits out after refusal of bank loan scuppers city centre expansion plans

RESTAURATEUR Tony Singh has revealed he has had to shelve a planned extension to his luxury Oloroso eatery after banks refused to grant funding for the project.

The chef, who has battled for eight years to have his plans for a second private dining room and terrace approved by the City of Edinburgh Council, has been forced to "indefinitely postpone" the £150,000 proposals due to a lack of funding from his bank.

Singh, who this year opened a second, bistro-style restaurant in the capital, was turned down by his banker, HBOS, on the grounds that catering was a "high-risk" business in the credit crunch.

Frustrated, he has since moved his business to Royal Bank of Scotland, but says the part- nationalised bank has also refused a further loan, although it has taken on his existing debt facility from HBOS.

But Singh, who bought Castle Street-based Oloroso eight years ago, claims that although he has been hit by the downturn in terms of a drop in business trade, his overall turnover is down by only 10 per cent. He said: "If we had been able to do the extension, it would have been phenomenal and we could have increased turnover dramatically.

"A few years ago, we could have got this money from the banks easily. We are an established business, we have always made our repayments on time. The banks need to start being banks again and put some money back into the system."

He added: "It just makes no sense. These so-called incentive schemes exist to encourage the banks to lend, but I do not know where the money is going – I haven't heard of anyone who has been able to borrow due to these schemes.

"It seems that if your business is suffering at all from the downturn, you don't qualify, but there are no businesses which have not suffered at all – and these are the companies which need funding to allow them to continue to grow."

Singh claims that demand for his private dining room, which hosts small wedding parties and exclusive dinners is still high – and believes he could have significantly boosted turnover if the second private room had been built. The expansion would have allowed him to take on an extra four chefs.

Ironically, Singh is convinced he could save himself money in the long run – if the bank was willing to lend him the money now. "There are a lot of deals to be had at the moment in terms of building materials and labour and it could be significantly cheaper for us to go ahead now," he said.

He moved to RBS two months ago after being refused the loan – and after HBOS said it was set to cut the company's overdraft. Lunch trade is down around 35 per cent to 45 per cent at Oloroso and overall sales have dropped by 10 per cent, but Singh is confident the business will break even in 2009, keeping turnover steady at around £2.5 million.

He said: "The corporate trade at lunchtimes is where we've seen the biggest drop off, although it is starting to come back slowly. But our business is going OK; people are still going out on special occasions, treating themselves and they are still getting married."

He added: "In previous years, we have had quite a strong profit and to break even in this climate is pretty good going.

"We are an established business and we are now left in limbo. We are having to restrict what we do and we have had to indefinitely postpone our plans for expansion."

His bistro venture, Tony's Table, which opened on 13 February year and is set to turn over around £1m by the end of its first year in business, was funded privately by Singh himself and businessman Sir David Murray. "It wasn't ideal timing, but you have to go on with things despite a downturn," Singh said. HBOS refused to comment.



RICH PICKINGS

OLOROSO, Tony Singh's flagship restaurant, was founded eight years ago by a group of 20 private investors.

The chef, joined by accountant Frank McMorrow, staged a management buy-out of the business in 2005 – the same year he set up an Indian restaurant, Roti, off Rose Street. Roti was sold to Singh's cousin three years later. His latest venture, Tony's Table, which opened in February, is aimed at the cheaper end of the market, offering informal, bistro-style food. Singh has appeared on TV shows such as Ready Steady Cook and the BBC's Indian Food Made Easy.