Bar-restaurant operator Darwin & Wallace said the outlook ”continues to be challenging”, after counting the costs of a tight labour market, soaring inflation and supply chain challenges in 2023.
For the financial year ended 28 May 2023, sales were £17.8m, compared to £17.5m the previous year, representing an increase of 1.8%.
Gross profit was £6.9m in 2023, compared to £7.4m the previous year.
The business said that sales conversion and profit were ”materially eroded” by a number of factors, including a tight labour market and consequent structural labour cost increases, which “unfortunately combined with soaring input cost inflation and supply chain challenges.”
The business’ top line sales growth performance was further “severely impacted” by the macro-economic challenges that faced the UK as a whole and the hospitality sector in particular.
Considerable disruption caused by ongoing transport strikes restricting peoples movement into and around the country and within London affected trading throughout the year, including some key trading weeks in the lead up to Christmas.
During the year bank interest rates increased significantly further dampening consumer demand.
These additional costs are estimated to have reduced site EBITDA by circa £1.1m.
In response to these head winds a cost saving plan was implemented both at site level and centrally and further initiatives have continued in to the current year in an effort to improve sales conversion, without impacting guest satisfaction.
During the year, following a review of the performance of the trial of a smaller site format at Battersea Rise against the changing operating cost landscape, it was concluded that the the focus should remain on our larger format bar restaurants.
Therefore, the Battersea Rise lease was reassigned in June 2023 to a new operator.
”The outlook continues to be challenging into the new financial year,” however Darwin & Wallace said its collection of ”well located sites in London villages” and premium all day bar and restaurant offer makes it firmly positioned to take advantage of any improvement in the macro-economic environment and consumer confidence.
