Jon Man points at the busy KFC a few doors along from his own restaurant on Wardour Street, one of the small number of bustling streets that make up London’s Chinatown. “That’s the best business around here,” he says. “That’s the one I would choose.”

Man’s parents emigrated from Hong Kong in the 1950s to work in Britain’s growing restaurant trade, bolstered as it was by the willingness of those freshly returned from foreign frontlines to taste new foods. His mother washed up while his father made Shanghai noodles, because few others could, before turning his hand to supplying foodstuffs from Covent Garden to the burgeoning number of local restaurants.

Now 52, Man has been working in one capacity or another inChinatown since his late teens. He knows everyone, and they all know him, but his children, 18 and 21, won’t follow him to work there. More significantly, he can’t see how he or his peers can stay.

London’s little Chinatown is, he suggests, in big trouble. The business model for these few teeming streets, squashed between the inelegant cinemas and hotels of Leicester Square and fashionable Soho, has long been cheap-and-cheerful food sold to theatregoers, office workers, late-night revellers and, to a lesser degree, tourists, not always by the most polite of serving staff. Chinese supermarkets, massage parlours and, for a long time, just three betting shops discreetly tucked away, added to the mix.

A certain authenticity has given the area its niche. It was a genuine community built by the emigrants from Hong Kong who, having been bombed out of Limehouse in the East End in the 1940s, made this patch of London, with its cheap commercial rents, their own.

But London is changing. The rough-and-ready charms of Chinatown today don’t necessarily fit in a city where a square foot of land can demand a rent of £838 a year. Eighteen years ago, Man was paying £66,000 a year in rent. In 2012, after a year of wrangling with his landlord, Shaftesbury, which owns the premises of 71 restaurants in the area, that increased to £244,000.

He is due another rent review in two years, when it will go up again, probably significantly. “I won’t be able to stay,” he says. “There will be no point in me being here. So many of my friends have already gone.”

Shaftesbury admits that about 10% of the restaurants it owns have changed hands in the last two years, although Man says that such churn, so damaging to the community, has been a fact of life for longer than that, and more of the same should be expected.

The Cheun Cheng restaurant, also on Wardour Street, distinctive for the enormous model dragon above its door, was owned by the same family for 40 years. They closed down 18 months ago and, with one eye on custom from the huge new hotels in the area, it is to be replaced by a steak house.

The owners of Loon Tao on Gerrard Street, who have been there for 20 years, are looking to get out having seen their rent soar from £160,000 five years ago to £312,000. The Oriental Dragon, a few doors along, is also up for sale. A raft of new betting shops – there are nine so far and another is proposed – have also appeared, as they can make huge profits from small rooms.

Walking on under the red lanterns left over from February’s Chinese new year celebrations, and offering a cheery hello to all and sundry, Man points at other restaurants. “They’re trying to get out. That one’s going. He can’t survive… I can’t see how Chinatown will be here in five years’ time. Not as I know it.”

A number of Chinatown’s businesses are reportedly for sale despite the area’s continued bustling popularity. Photograph: Andy Hall/The Observer

The landlords can be confident in demanding exorbitant rents because if the current businesses won’t pay, others most certainly will. DeVono, a commercial property agency, reports that demand for a foothold in London has tripled since March 2013. They say there is a year-long waiting list for hopeful entrants – “eating brands”. The right restaurant, often with the financial backing of a chain, can make a fortune. And the landlords setting the rents know it. Shaftesbury, whose real estate portfolio includes 575 properties in Carnaby Street, Covent Garden, Soho and Charlotte Street, as well as Chinatown, saw profits grow by almost 50% in the six months to the end of March 2014.

So the profits are there to be had, but can the independent Chinese restaurants, often one-man bands who have been in Chinatown for decades, be the ones to extract them? “There is footfall,” Man admits, “but they don’t spend money. The tourists come over, have a photo taken and disappear. They go to the KFC.

“There is nothing apart from the theatre to attract people who will spend money here. Leicester Square is just big hotels. One side of one of the roads in Chinatown is the side wall of the M&M’s store. The road is dead and it used to be full of retail. And since the congestion charge, and what with the lack of parking, even those coming for the theatre don’t drive and stay for a meal. They run off for the last train home. As the rent has gone up our turnover has gone down. And I can’t increase my prices because the customers won’t come.”

Shaftesbury says rent rises are just a reaction to market forces. They won’t, they admit, rescue failing businesses because “that would be daft”. And there are plenty of restaurants, Chinese or otherwise, willing to come in and pay the rents.

Man argues that those new entrants might not be so willing if they knew the truth. He has set up the West End Chinatown Tenants’ Association, through which restaurateurs already in Chinatown and those who are looking to get in can share information about rents. “There is new money coming from China, but they come over and accept extremely high rents, don’t know the market here and, within months, want to get out because there is no money to be made.

“That then sets a benchmark for all our rent reviews, and it is artificial. If we can share information, maybe we can help each other keep the rent down.”

But there is also a broader political question, according to Gareth Thomas, the shadow deputy minister for London, who is being mooted as a Labour candidate in the next mayoral election. “The mayor needs to champion small businesses and independent entrepreneurs, putting them at the heart of regeneration and modernisation plans and standing up to the big property companies on their behalf,” said Thomas. The city, he suggests, needs to decide on what it treasures.