Darwin and Wallace sales rise 1.8% in ‘challenging’ year
The group has attributed the erosion of its sales conversion and profits to an ‘incredibly’ tight labour market and structural labour cost increases
Darwin and Wallace, the operator of eight Greater London bar-restaurants, has reported a 1.8% rise in sales to £17.8m for the year ended 28 May 2023, despite macroeconomic challenges over the period.
The group has attributed the erosion of its sales conversion and profits to an “incredibly” tight labour market and structural labour cost increases, as well as soaring input cost inflation and supply chain challenges.
According to the group, its top line sales growth performance was further impacted by the “considerable” disruption caused by the ongoing transport strikes, which affected trading throughout the year, including key weeks in the run-up to Christmas.
As a result, these additional costs are estimated to have reduced Darwin and Wallace’s site EBITDA by approximately £1.1m. The group’s adjusted site EBITDA for FY22/23 reached £1.3m, compared with £2.6m in the year before.
In response to these challenges, Darwin and Wallace implemented a cost saving plan at site level and centrally. Further initiatives have also continued into 2024 in an effort to “improve sales conversion where at all possible without impacting guest satisfaction”.
During 2023, following a performance review of the trial of a smaller site format at Battersea Rise against the changing operating cost landscape, Darwin and Wallace concluded that the focus should remain on its large format bar-restaurants.
As a result, the Battersea Rise lease was reassigned in June 2023 to a new operator.
While the outlook continues to be challenging into the new year, the hospitality group believes it is “firmly positioned to take advantage of any improvement in the macroeconomic environment and consumer confidence”.