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By Ian McConnell

The owners of the restaurant group which includes Di Maggio’s and Café Andaluz have warned of the coronavirus pandemic’s “catastrophic” long-term toll on the sector, while revealing they expect to make an operating loss this financial year.

Mario Gizzi, co-founder of The DRG, said: “Our trading had been going well until Covid hit, but the total shutdown of the sector for month after month has taken a catastrophic toll on huge numbers of well-known and much-loved businesses, many of which will struggle ever to reopen.”

He added: “Our group is one of the most robust and well-managed hospitality operators in the country and we will do what we have to do to make it through this, but if the hit to our trading and operations is anything to go by, there will be many businesses which will simply remain shut even when the lockdown restrictions are finally lifted.”

The DRG, which also includes the Anchor Line and Amarone brands and has 20 restaurants in total, has posted a sharp fall in profits for the year to April 30, 2020.

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Turnover dropped by £4.178 million to £32.301m in the 12 months to last April, and operating profits more than halved to £2.184m from £5.082m. Average employee numbers fell to 817 in the year to last April, from 862 in the prior 12 months. The company said it expected to make an operating loss for the current financial year to April.

The DRG said its current workforce was 650, with 630 of these employees currently furloughed. Amid the latest coronavirus lockdown, the group’s operations are limited to two of its restaurants, Di Maggio’s outlets at Shawlands on the south side of Glasgow and at East Kilbride, offering takeaways.

The company, which has many long-serving staff, emphasised it was very keen to retain all of its 650 employees, noting this would enable it to reopen quickly and effectively.

However, it added that this depended on the lifting of restrictions and the ability to return to some sense of normality. In the meantime, it said it was very keen to see additional government support for employers in the current situation.

Asked if it would like to see an extension to the UK Government’s coronavirus job retention scheme beyond the end of April, the company said the furlough support was very welcome but emphasised the programme was not free for employers.

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Mr Gizzi said: “Many people don’t realise that the furlough scheme, while welcome, still leaves businesses with significant staff costs if your aim is to retain people rather than cutting jobs. For us, that means we are still paying £100k per month in staff costs such as national insurance, pensions and holidays, while having no revenues coming in. And that’s before we have to meet fixed costs such as rent and insurance for each one of our premises of around £20k per week, with only £600 to £700 in grants per location coming from the government.”

The DRG described the effect of coronavirus lockdowns on Scotland’s struggling hospitality sector as “brutal”.

Commenting on results for the year to April 2020, Mr Gizzi said: “It’s been absolutely brutal. Even though only a brief period of those results was impacted by Covid, it shows just what a debilitating effect it is having on the entire hospitality industry.”

Fellow director and co-owner Tony Conetta said: “It’s all very well being told that you can reopen, but if social distancing, curfews, click and collect and takeaway bans remain in place, many businesses will find it simply unviable to reopen their doors, meaning hundreds of bars and restaurants will shut forever.

“Even when allowed to open during last year, social distancing restrictions and curfews dramatically reduced the capacity of our restaurants. Since last March, we’ve only been able to operate with any degree of normality for just eight weeks, thanks to the Eat Out To Help Out scheme, and even that was with strict social distancing. The rest of the year has been a wipe-out.”

He added: “We’ve got colleagues who have been with us for many, many years and it’s been heartbreaking having to put them on furlough. They just want to get back to work, like the rest of us.”