Di Maggio’s and Café Andaluz owner The DRG saw profits tumble in its last financial year as it faced sharp rises in labour and other costs, even though it posted record turnover.

Directors of The DRG, which describes itself as Scotland’s largest independent restaurant group, said that anticipating and overcoming the “twin staffing challenges of Covid and Brexit” had been key to the continued growth of the business.

And founding director Mario Gizzi flagged potential to open a further five Café Andaluz restaurants, in Scotland and England, over the next three years.

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The business, which was started with the opening of Di Maggio’s in Shawlands on Glasgow’s south side in 1985, has grown to a network of 21 locations, with its other brands including Amarone. The DRG’s portfolio also includes Glasgow restaurants The Anchor Line, Barolo and The Citizen.

The DRG’s annual turnover increased by £1.458 million to £45.838m in the year to April 30, 2023, with operating profit before exceptional items falling by £3.7m to £5.04m.

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The company said: “The main reason for the drop in profit was significant cost challenges faced, namely increased staff costs in line with national minimum wage increases, increased cost of goods and the hike in utility costs.”

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The DRG, which last week revealed plans to make is first move into London, noted that it had since its last financial year-end invested £1.5m in opening its third Edinburgh Café Andaluz restaurant, within the grandstand of Edinburgh Accies rugby club in Stockbridge. This opening has taken The DRG’s total number of Café Andaluz branches to seven.

Mr Gizzi, co-owner of the Glasgow-based restaurant group, said: “Café Andaluz is proving to be an extremely successful brand for us, since we first launched it in Glasgow in 2002. It’s one in which we definitely anticipate investing further in the years ahead, as we have developed a food offering encompassing a really wide variety of high-quality dishes, which have proven enormously popular with locals and tourists alike.

“In older buildings housing a Café Andaluz, we complement that with a more traditional interior design, but in locations such as Stockbridge, which are new builds, we’ve put a much more modern twist on it, using our excellent in-house designers who have visited Spain regularly over the past couple of years, bringing back a whole slew of brilliant ideas from some of the best new restaurants in Malaga, Madrid and elsewhere.”

He added: “Over the next three years, if things continue to go well, there’s every chance that we could open another five Café Andaluz restaurants between Scotland and England.”

The DRG noted that, in spite of “the well-documented staffing challenges which the hospitality industry as a whole is facing”, its employee numbers had risen to 985, nearly 100 more than in the previous year.

Director and co-owner Tony Conetta said: “Prior to Brexit, two-thirds of our staff came from overseas and predominantly from Europe. Every single hospitality business has faced the same challenges.

“We predicted that around 50% of the Europeans would leave and would not return so, anticipating that, we were really keen to ensure that employees were encouraged to build a career within the business rather than simply a short-term job.”

He added: “With that in mind, we took a conscious, strategic decision to invest more heavily in training and recruitment and are now reaping the benefits of building a reputation as a restaurant group where we really focus on recruiting, developing and retaining brilliant staff.

“As a result, the rate of attrition in our senior positions, from chefs to general managers, is amongst the lowest it’s been, which is fantastic for continuity of quality and ensuring we have the experience and knowledge across the business to train the next generation.”

The DRG flagged 28-year-old Erica Riposati and 35-year-old Marco Di Girolamo, who are both from Italy, as “just two of the team members who have been promoted to senior positions in recent years”.

Ms Riposati, now general manager at The Citizen, said: “I was very lucky to get a job here within days of arriving in March 2018.

“I’ve progressed up from bartender to waitress and then supervisor, and was appointed general manager last February. In Italy, the hospitality industry is dominated by small family businesses, and so it’s often difficult to progress in your career, but the senior team at The DRG have always believed in me and pushed me to show what I can do, supporting me with great training and guidance.”

Mr Di Girolamo, who worked for Hilton Group in Aberdeen and Glasgow for four years, joined The DRG in September 2017 as a bar supervisor at The Citizen and was promoted to assistant general manager prior to the outbreak of the coronavirus pandemic. When The Anchor Line was reopened, he was appointed as its general manager, and he believes the company’s mentoring programme has played a significant role in his career growth.

He said: “It’s obvious there is a really well-planned approach to training and development in the business. It’s been fantastic that people can have the chance to work and learn across multiple brands within the group and also in multiple locations, both here and down south.”