On Monday this week, JKS Restaurants, a London-based restaurant group comprising some of the best-known, cult-followed, and well-respected brands in the city, retained its six Michelin stars and three Bib Gourmands — adding another of the latter for good measure. In a year that has seen restaurant dining rooms closed for approaching eight months, for a group that includes Gymkhana in Mayfair, Lyle’s in Shoreditch, and Bao sites all over the capital, it was a flashback to the routine success of the pre-pandemic era.
Routine and success are no longer things restaurateurs can rely on. Since last March, JKS has, like others, has had to adapt and pivot — to delivery and retail. Unlike many others, it has a central office, infrastructure, investment, and experience in the delivery market. After doing almost nothing public-facing for eight weeks during the first national lockdown last spring, the owners of JKS and their diverse array of restaurants were busy behind the scenes. Ten months later, the business is, according to chief executive Jyotin Sethi, leaner, more creative, and more resilient. With nine separate online retail outlets, it is also very different.
As of January 2021, there is a corona-time delivery or retail analogue for almost every restaurant brand within the JKS portfolio: Gymkhana, Trishna, and Brigadiers are covered by Ambassador General Store; Hoppers by Cash and Kari; elsewhere, there’s the Berenjak Bazaar; Bao Convini; Sabor en Casa; & Home by James Knappett; Bubbleshop by Sandia Chang; Lyle’s Provisions, and Flor online. Before the pandemic, JKS had created a city favourite delivery only restaurant brand in Motu. Since last March, it has introduced two more: Rice Error by Bao; and ASAP, arguably the city’s best NYC- and London-style pizzeria masterminded by baker Pam Yung and James Lowe of Lyle’s and Flor.
The pandemic has been challenging for JKS, but as a group those challenges have been embraced: new businesses, new brands, new revenue streams, new markets, and new opportunities. Seize it all, the group thought.
And seize it they did. So much so that in the middle of the third national lockdown with all dining rooms closed, the group is satisfied with its e-commerce and delivery corona-time strategy, re-adopted on 16 December, when London entered then the strictest coronavirus restrictions. “We’re resigned to the fact that we’ll be in this until at least April,” Sethi told Eater on the phone in mid-January. “No one is clamouring for a reopening date. When we’re able to reopen [the most important thing is] we’re given a clear run at it, so it’s de-risked.” In other words, another cycle of dining room closures could be the one that restaurants don’t come back from.
With all of the group’s restaurants fixed in a state of limbo, with delivery and/or retail keeping them ticking over, the focus at head office is on the future. “We’re planning for reopening on the other side,” Sethi said. “Improving our existing restaurants and [opening] new stuff.” The cadence embraced in 2020 is the new standard.
It wasn’t always so straightforward. Rather, the agility shown by JKS since November 2020 is no accident. The stress from lockdown one, the months of March, April, May stand out — with restaurant dining rooms closed and businesses plunged into a state of profound uncertainty. “We had no revenue for eight weeks,” Sethi remembers. Now, there is no comparison. “Delivery and retail is not as stressful but it’s a headache — the admin is a nightmare.”
Against what is a very real citywide story of struggling businesses, desperately seeking the means to stay afloat, JKS is eyeing opportunities to grow its restaurant portfolio. In Sethi’s words, quite simply, to “pick up sites.” It was recently announced that one of the brands the group invests in had acquired a premium site on the corner of Redchurch Street for a new Bao in Shoreditch. “We are hoping to close [more] deals and take advantage of landlords,” Sethi said. In addition to what will be a sixth site for Bao, the group will be opening three or four new restaurants this year, some of which were scheduled to open in 2020, but had to be pushed back.
“A lot of stuff on the other side [to look forward to]. It’s a silver lining on this shitshow — there are property deals [to be done] that have not been around for 10 years.”
Sethi is anticipating the post-pandemic period of reopening “bounce-back” to be “pretty strong.” And while restaurants will be repaying debt — “everyone has taken on more debt, with the CBILS [business loans, repayable from this spring]” — he said that JKS was in the fortunate position where rent debt “was not a massive issue for us, because we engaged early and have been able to do sensible deals.”
“I’m fortunate to be in a position where I’m not massively stressed [about rent]: we’ve got landlords who fundamentally want us to stay.”
In Sethi’s view, landlords have put long-term faith in the group’s restaurants because of a three-part formula: a proven track record; loyal customers; and brand value which had positively affected the value of the property itself. But that could only partly explain an outcome that was broadly similar between 12 different landlords — some private, some estates, and others institutional. Sethi believes it was also about relationships and conduct too. “We’ve taken a transparent, collaborative, and open-book approach,” he said. “To be honest, no landlord conversation has involved lawyers.”
But while JKS has been among the most agile and ostensibly successful with their various pivots through the pandemic, the business is generating just 35 percent of the revenue it was pre-Covid, Sethi admitted. And since retail did not exist until last May, some of that revenue is new. It was also, he said, “significantly less profitable — with commission to the likes of Deliveroo and staff costs still high.” Overall, there was less margin on retail, with expensive packaging and logistics taking chunks out of the bottom line.
But JKS is, if nothing else, a savvy operator with as much cultural capital as cash, contacts, and people. Its retail divisions spanning nearly all restaurants in the group — the ones directly owned by JKS and invested in by the group — are now “permanent features of the business,” Sethi said. Much of the brands’ activity through the successive lockdowns has not merely been about cash generation but about brand visibility. “Guest engagement,” he calls it. It has also brought in new customers, which it hopes will visit the restaurants once they reopen. It’s also keeping a number of the group’s chefs on full salaries, while the vast majority of its front-of-house staff remain on full furlough.
These short-term solutions with long-term benefits have, Sethi says, “built some resilience into our business.”
This is one of the ironies of the COVID-19 crisis on the restaurant industry: it has been astonishingly cruel, unforgiving, and interruptive. But it has also forced businesses to make decisions that they didn’t know they needed to make or that they knew they needed to make but hadn’t got around to making them.
For JKS, change has taken place not just in what the group produces, but how it operates internally. “The only way to get through this is to focus on the positives,” Sethi said. The company was now “leaner”, “more agile,” “resilient,” and “creative.” Sethi said it had been able to return more to its entrepreneurial roots, which gave it the ability to “create stuff quickly.” That came with a 15 percent staff reduction — mainly from head office — but Sethi was unequivocal that “We’re a better business now.”
In the call, Sethi was generally confident and optimistic about an uptick in fortunes for businesses like those he owned and in which JKS was a lead investor. “[The] opportunity is no different; we can still grow how we wanted to [pre-Covid],” Sethi reflected. “We can do it better, now.”
“Given the choice, no one would have gone near [this crisis], but if you can get through it ... the prospects for the next two or three years are better than they were before [the crisis],” he said.
“Less supply, better people, good sites, cheaper sites, better deals to be done with landlords. [The future is a] better landscape as long as you can get through in decent shape.
“Eating out is in people’s DNA... for those ‘best-in-class’ ‘top-tier’ restaurants, demand is not going anywhere.”