York cafe suddenly closes and moves to Saudi Arabia due to cost and city’s focus on hen parties

A cafe business in York has suddenly closed and plans to move to Saudi Arabia after costs in the city became insurmountable.

The decision of the Tea Palace came so quickly that it was closed before newly hired employees could start working there.

And sales director Daniel Ibbotson says a place that sells tea isn’t a good fit for a city that’s more “oriented towards bachelorette parties.”

He told YorkMix that trade since the end of the summer “has been massively reduced and this along with the site’s rising operating costs has led to the unfortunate decision to close.

“Operating costs continue to rise; between rent, rates, wages and utilities there is very little change of £25K each month.

“Looking at the next six months, all we could see was the rates going up, the cost of food doubling and there’s no way we can charge more than £5 for a pot of tea.”

The company will move out of the UK, Daniel said. “The entire business will be relocated to Saudi Arabia and will focus on offering English tea and related UK products from both its retail locations in Riyadh and Jeddah.

“We have always had a strong identity in the Middle East and are exploring a new emerging market, especially with the kingdom’s Vision 2030 goals.”

Ten employees affected

Closes for good… the Tea Palace on Low Petergate, York. Photo: YorkMix

The company employed ten people. “Several of them have left York to go to university or go back home after senior year,” he said.

“I believe the rest are looking for work elsewhere

“The senior management team is assisting with our Saudi operation.”

One person recently recruited by the Tea Palace said: YorkMix: “Me and two people left another tea shop to join, but it closed before we started.”

Daniel said that happened because the decision to close came so suddenly: “It was a decision made after an evening meeting with our accountant at the site.

York cafe suddenly closes and moves to Saudi Arabia due to cost and city's focus on hen parties
The ‘Closed’ sign on the door of the Tea Palace. Photo: YorkMix

“Essentially we needed another £30k to trade until next year and we all agreed that the company wouldn’t be able to generate that until the Christmas period.

“The decision was made by company directors and the store manager who recruited that person was not informed until the next morning.”

Before it became the Tea Palace, it was Mr P’s Curious Tavern, launched by the Star Inn chef Andrew Pern. It closed during the Covid crisis.

Daniel said: “The two-storey building is better suited to another multi-chain restaurant or pub.

“We simply don’t have the same financial reserves to completely overhaul the site. As you can see all over the street, bigger national suppliers are taking the market share because of the huge brand mass.”

He thinks that “York is getting a little too focused on bachelor parties” and that the city is now “striving for a younger market – more drinking culture rather than a tea and scone”.

York cafe suddenly closes and moves to Saudi Arabia due to cost and city's focus on hen parties
A very English offering at the Tea Palace. Photo: teapalacelondon.com

He told YorkMix that the company settled all of its suppliers when it closed. “Yes, we paid for all our food on account. We are in talks with the landlord to cancel the contract.

“The landlord is actually very understanding.”

We reported in July that the Tea Palace’s neighbor, Crew Clothing, was also closed.

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