A meal with a view: Why street food market maverick London Union is looking for investors

We're just scratching the surface of what’s possible in London,” says Jonathan Downey, co-founder of London Union, which transforms sad corners of the city into vibrant street food markets. Downey, known as JC and founder of Street Feast, teamed up with Henry Dimbleby, the founder of restaurant chain Leon, to start the new company.

 

“In the past five years, eating out in London has transformed into the best in the world. We’ve got supper clubs, pop-up events – there’s a real zeitgeist around it.”

 

Downey thinks much of this is a reaction to fine dining. “People like great food, but they want it in a more relaxed environment. Some people think, probably rightly, that it’s an economic response to the recession.” 

 

But as the economy left the crisis behind, entrepreneurs continued to focus on low capex ventures, testing the market before opening bricks and mortar restaurants. “It’s the magic of having a lot of people doing the same thing at the same time.”

 

Downey and Dimbleby already have a network of markets – Dinerama in Shoreditch, Dalston Yard and Hawker House in Canada Water – and they’re now focusing their efforts on their flagship project: a single, vast street food market in central London, which will be in an “iconic building”.

 

The deal hasn’t been signed yet, but the pair are optimistic. “We’ve got a five-year plan which includes 12 smaller local markets around London, in addition to the flagship one. We’ll have six or seven open by next summer, and the flagship by 2017.” They’re also looking at Berlin and North America, in terms of international expansion. 

 

To raise the funds needed to get their vision off the ground, London Union has turned to equity crowdfunding, on platform Seedrs. The community engendered by crowdfunding was always going to suit a business that relies on a community of traders and creates a new community with each group of customers. And Downey would “much rather do it via crowdfunding than a bank or VC”.

 

Aiming to raise £3.5m, the company is looking for 700 people to make a minimum contribution of £5,000. “We’ve had lots of private conversations with people who want to put in £400,000, £2m – even the full amount. Obviously they can’t do that – there are already other investors – but it means we’re pretty confident we can hit our target.” 

 

The company has a valuation of £31m. I ask Downey if he thinks that’s on the high side. “Crowdfunding valuations are generally a bit higher because you’re taking a little bit from a lot of people. But in our first five months we made £1.65m profit. No hospitality business makes that much; it’s an amazing performance.” And he points out that all London Union’s investors are getting Enterprise Invest Scheme relief (at 30 per cent), plus various generous rewards. 

 

The £5,000 target is interesting – what about those who might want to put in less? But Downey explains the reasoning behind it well. “One of the issues with a lot of crowdfunding sites is that you get pest investors – people putting in £100, £250. They can become a thorn in the side of business owners, because they over-demand information.”

 

He also points out that, if you’re a business with venues, there are many opportunities for investors to turn up and visit. Those who do invest in London Union will get a seat at the firm’s “Annual General Eating”, launches, previews and a Union Card, which gives free access with three guests in perpetuity (London Union markets are usually £3 to enter). Invest over £10,000, and you’ll get a 10 per cent annual bar tab discount. Of course, this creates an incentive structure for committed investors and loyal customers – it wouldn’t be so feasible if people were putting £100 each. 

 

London Union already has a cult-like following. Prominent industry supporters – and investors – include Jamie Oliver, Nigella Lawson, Yotam Ottolenghi, Thomasina Miers and Nick Jones. “They’re not doing it for financial gain, they’re doing it because they want to be a part of creating the world’s best market; they want to help make a difference to traders and the future of London – and they’re backing us to deliver that. That said, Giles Coren jokes that he’s going to get £2m in two years!”

 

Having celebrity backers has also helped with planning and local authorities, says Downey. Having been in the industry since the mid-1990s (before that, he was a corporate lawyer), he’s seen plenty of friends and acquaintances burnt by stringent and sclerotic laws and councils. “It gets smoother as you develop a track record, but it can be f***ing painful. I’ve seen people trying to open restaurants and then having to pull out. Hackney Council are trying to stop new venues from being open after 11pm.

 

That extra hour can make all the difference to trading – a few rowdy clubs should not mean everything has to close.” He adds that it really depends where a business is in London – because each borough operates differently – but getting sites is extremely difficult. And, if you’re young, branded businesses are going to push prices up, meaning only second and third-grade sites are going to be an option.

 

But this all feeds back into what Downey and Dimbleby are trying to achieve: spaces where those providing good food can trade at reasonable rates, and those buying can do so for a reasonable price – while enjoying a great atmosphere. London Union has a social media following of 300,000 – and growing. “If you’re a fixed-space restaurant, it’s much more important to look after the people who come into your building than to be clever on social media. But we’re catering to the cool young crowd. They’re very social media savvy. In fact, they find us.” 

 

This vindicates Downey’s view that he and Dimbleby can create the most popular tourist destination in London. “If you’re a 27 year-old creative from Tokyo visiting London, where would you go? Dinerama – because there’s nothing else like it in Japan, and it’s epic.” 

 

www.seedrs.com/london-union-plc