Planque is unobtrusive. The blue framed entrance is on a side street off Kingsland Road in Haggerston. Inside: oak tables, Austrian glassware, an indigo-painted alcove, a room that holds maybe sixty people on a Saturday. Chef Seb Myers does not perform. He sends out an oyster with hot pepper, saline and a slow heat that arrives after you have already swallowed. A raw scallop tartlet follows, the sauce invisible inside until you bite. Vittles' Jonathan Nunn called it the best restaurant in London. No second site or growth plan on the cards. Just a room that means something specific to the people who populate it, and nothing replicable to anyone else.
The specificity is the asset.
It is also the thing that approximately £1.2 trillion of private equity capital, cycling through the British economy over the past four decades, has consistently failed to manufacture, and reliably succeeded in wrecking.
Draw a line through any business. Below it sits everything that can be optimised, standardised, reproduced at scale: procurement, scheduling, inventory, service delivery, the operational machinery that makes a business run. Above it sits everything that cannot be systematised: the trust that accumulates over years of meaning what you say and doing it, the cultural weight of a room that has meant something to people, the reason a customer comes back that has nothing to do with price.
Call it the automation line.
Private equity spent three decades improving what sits below it. The strategy was rational. Operational excellence was scarce, and the returns were there. Buy a distinctive concept, apply industrial logic, roll it out, extract margin, sell on to the next buyer. When every competitor is inefficient, the efficient firm wins.
The problem was the assumption embedded in the strategy: that the thing being acquired was a below-the-line asset. That what you were buying was the system, the brand, the operational model. In British hospitality, that assumption turned out to be wrong almost every time. And the correction, when it came, was disorderly.
PE's existing operational tools had already pointed toward this. Toast and OpenTable automated reservations and floor management. Labour scheduling software centralised staffing decisions. Centralised procurement systems stripped local supplier relationships in favour of margin. These were early steps below the automation line, applied to businesses whose real asset sat above it. They worked, until they didn't, and when they didn't the losses were structural.
Artificial intelligence is completing what those tools began.
According to McKinsey Global Institute's June 2023 report, current AI and related technologies have the potential to automate work activities that absorb 60 to 70 per cent of employees' time. The operational advantages that PE spent thirty years leveraging are becoming commodities. Operational excellence was once a differentiator. AI is turning it into infrastructure. The scarcity that made below-the-line excellence profitable has been removed, simultaneously, across sectors once insulated by their operational complexity: Zalando linked improved profit forecasts in 2024 directly to AI-driven efficiencies in product imaging and returns management. Banking, professional services, logistics, retail, and yes, hospitality.
The only advantage that compounds from here sits above the line. In financial terms, that advantage has one expression: pricing power. And for the firms that spent thirty years learning to optimise below it, that is a serious problem.
Ian Trueger documented, in a meticulous piece of reporting for The Fence published earlier this year, exactly how we arrived at this moment of reckoning for British hospitality. His account of the decades between Big Bang and Byron, of PE's Rabelaisian appetite and the wreckage it left, chronicles how below-the-line logic consumed a sector whose value was always intangible. This is the next chapter. Not what happened, but why it was always going to happen, and what it means now that the same logic is meeting the same reckoning in every other industry at once.
The sharpest case study is one Trueger covered but whose full implications are still unfolding.
In January 2022, Minor International, the Thai-based hotel conglomerate that had accumulated a 74 per cent stake in the group behind The Wolseley, The Delaunay and Brasserie Zédel, forced Corbin & King into administration. Minor had paid, as Jeremy King confirmed in an interview with the Telegraph in March 2026, £60 million to take full control. The stated logic was expansion: iconic brand portfolio, international growth, exciting plans. King was locked out.
What followed was not sentimental. It was deliberate.
Every senior manager walked. Jesus Adorno, who had started as a barman at Le Caprice in 1981, came back to King at Arlington. A carver who had worked at Simpson's tracked King down and returned. King has since opened three London restaurants, including a relaunch of Simpson's in the Strand. Minor kept the buildings and the names. King, impeccably suited, walked off with the asset.
King has a formulation he has returned to consistently. "Decisions are made in the boardroom that would never be made on the floor," he told Spear's in February 2024. "Restaurateurs do it from the floor. Restaurant owners do it from the boardroom. And you can tell." What he is describing is not a preference for craft over commerce. He is locating where value is created. Value in his business was created at the table, by people who were present, who meant it, who had accumulated over years the kind of authority that cannot be hired from a recruitment agency or recovered from the wreckage of administration.
The brand did not stay with the property. It left because it was never in the building. It was in the people, and the people followed the person who understood that.
Minor bought the 49. The 51 left with King.
Danny Meyer understood this distinction, and expressed it with a precision that maps almost exactly onto the automation line.
In Setting the Table (HarperCollins, 2006), Meyer distinguishes between service and hospitality that turns out to be the most useful framework available for understanding where above-the-line value actually lives. Service, he writes, is the technical delivery of a product. Hospitality is how that delivery makes the recipient feel. Service can be optimised, systematised, improved by software. Hospitality requires care from a person who means it. It cannot be scheduled. It cannot be standardised. It compounds, or it doesn't, based on whether the people delivering it are present in the room and invested in what happens there.
Meyer built his operating model around this distinction explicitly. He describes devoting roughly 49 per cent of his energy to what he calls "the business of running a restaurant", the operational excellence, the quality controls, the financial discipline, and 51 per cent to the hospitality culture that makes guests want to come back. The 49 is teachable, measurable, improvable. The 51 is the compounding asset. The gelato brought to the couple overheard mentioning their anniversary. The bottle opened because someone noticed. Low cost to the business. The story lasts for decades.
Private equity, when it acquired hospitality businesses, consistently identified and acquired the 49. The 51 walked out with the founder.
Meyer proved the financial logic with Shake Shack. When the company went public in January 2015, priced at $21 a share, it closed its first day of trading at $45.90, giving it a market capitalisation of $1.6 billion. For 63 locations. A fast food chain, on any conventional analysis, is a below-the-line asset: scalable, reproducible, subject to operational optimisation. What Meyer had built, over two decades of rigorously maintained hospitality culture, delivering above and below the line, was a brand with pricing power at a category level that competitors could not match. He understood precisely which part of his business sat above the line and which sat below it, and he treated them accordingly. The 49 he took public. The 51 stayed at Union Square Cafe.
Warren Buffett reached the same conclusion from the investor's side, and made it in 1972, fifty years before artificial intelligence became a mainstream concern beyond Stanley Kubrick.
See's Candies was a West Coast chocolate manufacturer. When Buffett and Charlie Munger acquired it for $25 million through Blue Chip Stamps, they were paying roughly three times book value, a multiple that was, by Buffett's own account, unprecedented for him at the time. His previous investment philosophy had favoured distressed assets available below book. Munger persuaded him to look at what was not on the balance sheet.
What was not on the balance sheet was an asset Buffett would later describe in a 2014 letter to shareholders as "a broad and durable competitive advantage that gave it significant pricing power." Customers in California bought See's for gift occasions: birthdays, Valentine's Day, Christmas. They associated the box with the feeling of giving something that meant something. That association had been cultivated over fifty years by the See family and could not be replicated by a competitor offering a technically similar product at a lower price.
The consequence was that See's could raise its prices every year without losing customers. Volume grew at roughly 2 per cent annually. Revenue grew at 9 per cent. The difference was all pricing power. By 2007, according to Buffett's annual letter that year, See's had generated $1.35 billion in pre-tax earnings on the original $25 million investment, while requiring only $32 million of reinvestment over thirty-five years.
Pricing power is the financial expression of advantage above-the-line. It is what you are buying when you pay above book for an intangible asset. It is what compounds. It is what most PE operating models are not designed to create, and what their mechanisms of value extraction (debt loading, rollout acceleration, centralised decision-making, price increases to service leverage) systematically corrode.
Buffett paid above book for an asset that meant more to its customers, and therefore meant more to its owners. Customer value became company value became shareholder value. The chain central to Buffett's and Berkshire Hathaway's success. Most PE firms paid above book for the container, disregarded the meaning, and were surprised when the whole turned out to be worth less than they had assumed.
Byron is the cleanest illustration of the extraction mechanism.
The founder built something distinctive: the first serious American burger concept in the UK, grown to more than sixty sites and turning over £80 million, with a brand identity that customers had made their own. When Hutton Collins acquired it, the company was loaded with substantial offshore debt, routed through intra-group structures. The expansion that followed (more sites, standardised kitchens, centralised menu decisions, price increases to service the leverage) worked for a period. The brand's accumulated meaning subsidised the growth. Then the meaning ran out. What remained was a leveraged property play with a logo. The pandemic accelerated what the model had already made inevitable.
The mechanism is the same in every case. PE identifies a business with above-the-line value: pricing power, customer loyalty, a brand that means something specific and valuable. It acquires that business and begins, systematically and rationally, transferring the above-the-line value into below-the-line operations. Decision-making moves upward, away from the room where value is being created. The people who built the meaning leave or are marginalised. Operational efficiency improves. The brand and what it means to employees and customers erodes. The market cottons on and reprices accordingly.
The strategy is not irrational. In a world where operational excellence is scarce, the returns are real. A mechanistic, Ford-production logic applied to a sector that represents its antithesis provides a satisfying but misguided certainty. The mistake is confusing the container for the thing, and the PE model (debt-funded, multiple-dependent, exit-oriented) creates systematic pressure to make exactly that mistake.
The question for every operating partner today is not whether the portfolio company is efficiently run.
AI has made operational efficiency a commodity. McKinsey's June 2023 analysis suggests that 60 to 70 per cent of current work activities are technically automatable by existing AI systems. The firms competing on below-the-line advantage are competing on a basis that will, over the next cycle, be available to every competitor at near-zero marginal cost. The moat is draining away.
There is a counter-argument worth meeting directly. AI, the argument runs, enables personalisation at scale: a system that knows a customer's name, preferences, history, habits, the kind of relational knowledge that previously required a human. If AI can replicate the relational layer of hospitality, the above-the-line distinction weakens.
Meyer's framework answers this head on. Personalisation at scale is still service: the technical delivery of a product, now technologically enhanced. Hospitality is how that delivery makes the recipient feel, which requires genuine care from a person who means it. The carver who tracked Jeremy King down and came back was not returning to a personalisation algorithm. He did because the relationship, the environment, the entity was real. Customers may accept the former; they tend to reserve their loyalty, and their willingness to pay more, for the latter. Meyer was explicit on the sequence: employees first, customers second, investors after. The 51 compounds from the inside out.
The question is not whether the business is efficiently run. It is whether it has pricing power. Whether customers return because of what it means to them, not merely what it costs. Whether, when the operating partner leaves the building, the thing that made the asset worth acquiring stays or goes.
If the answer is no, the exit is exposed. Not because of macroeconomic conditions, but because the asset was not the asset the acquisition price assumed.
At Planque, by two-thirty, the room has thinned. An algorithm didn't suggest the scallop tartlet. The wine list is concise and changes weekly. The crowd that returns does so because the room means something to them that cannot be reproduced at a second site, recovered from administration, or optimised by a system that has never walked the floor.
This isn't romance. It's finance.
Above the automation line, there is only one asset that compounds. Pricing power is its expression. Meaning its constituent. The firms that understand that will be valued accordingly.