D&D London's Des Gunewardena: "I’m working on 16 deals over the next two to three years"

The restaurant group says it is moving into a more expansive phase following the challenging past 18 months with plans for new restaurants in cities across the UK as well as in London as it looks to reduce its dependency on the capital.

“I’ve actually got 16 deals that I’m working on now over the next two to three years,” says Des Gunewardena, chairman and CEO of D&D London. "Maybe not all of them will happen.”

“We’re 75% in central London – we are overweight there - and we need to broaden our geographic spread. So, of those 16 projects only five will be in London, three will be overseas and the other eight in UK in cities that aren’t London. We are going to go into a more expansive phase now.”

Prospects include opening second venues in Manchester and Bristol with the Scottish cities of Edinburgh and Glasgow also on the cards.

“I am very positive about Manchester, it’s a great city and we think it’s going to grow,” says Gunewardena. “20 Stories is one of our most successful restaurants in terms of revenue.”

“Manchester has got a pattern of trading that is much closer to London and we’ve got a few projects in the pipeline. We are looking to do something else in Bristol and looking at Edinburgh and Glasgow also.”

D&D’s next launch will be the 24th floor rooftop restaurant at 103 Colmore Row in Birmingham that is due to open in spring 2022. While the company is yet to decide on the style of food there Gunewardena says it will be “quite a high-end restaurant, very smart and a slightly more formal restaurant than we’ve done for a while".

D&D’s most recent opening has been Haugen in Stratford​​, which opened last month. The group also opened Klosterhaus in Bristol​​ last year.

The company says the current large supply of properties and more cooperative landlords will facilitate future growth.  “There is much more of a willingness from property owners to be bigger funders in terms of restaurants as opposed to handing over shells and asking the tenant to fund it because tenants are not in the strongest financial position,” says Gunewardena.
 
“We haven’t got tons of cash, and yet landlords want to build more restaurants with us. We’ve got some quite innovative structures we are using to open restaurants without us having to shell out masses and masses of cash.”

London restaurants feel the pinch

In a trading update the company announced that its UK restaurants have traded substantially ahead of expectations since April but that central London revenues were below pre-Covid levels due to absence of office workers and tourists.

“There is no hiding from the fact that the profile of D&D’s restaurants – mostly in central London and predominantly known for their dining experiences rather than food only – meant that we were hit harder by Covid and not been as fast to bounce-back as restaurants which could tilt their businesses more easily to delivery and/or were based mainly outside London,” Gunewardena says in the update.  

“Despite this our business has recovered strongly particularly in terms of profitability, helped by cost reductions and government reliefs. We are also now seeing the start of a more powerful central London and corporate spend recovery which is boosting revenues.”

Revenues outside London in Leeds where it operates the Crafthouse, Angelica, Issho and East 59th venues, and Manchester (20 Stories) have been consistently significantly higher than pre-covid since reopening, it says. Revenues in London residential areas, where it operaes restaurants including Bluebird, Le Pont de la Tour, Butler’s Wharf Chophouse, Cantina and Fiume, are also substantially higher than pre-Covid.

Staff shortages to get worse for Christmas

The group says that trading in some of its restaurants have been constrained by availability of skilled staff and that the company was having to cap cover numbers as a result. It had intended to open a second restaurant on the first floor of Haugen but this has been delayed until next month because of staff shortages.

Earlier this month the group announced it would be permanently rolling out its chef training programme​​ that it launched over the summer to address back of house staff shortages.

“We have always had staff challenges, but I’ve never seen anything quite like this,” Gunawerdena says. “Coming out of Covid everybody wants to be out, we’re busy, but we’re reopening with fewer staff and so we’ve got a bit of a job do to in rebuilding the workforce. The shit will hit the fan in December.”

“However, Covid has demonstrated to me the strength of D&D – our people, our customers, as well as our stakeholders and business partners. And that is what gives us the confidence and ambition to continue to grow the business despite what could be a bumpy road ahead.”