Work is under way to extend the Wig & Pen bar and restaurant backwards into Paradise Square – and the project has already uncovered a few surprises.

Layers of old carpet, underlay and bitumen screed on the ground floor have been peeled away to reveal original 18th century flagstones. Behind tatty boxing in first-floor window embrasures were found the original window panels and enough architrave to serve as a pattern for restoring the rest.

And beneath the stairs of the Georgian building is a door to the cellars, long ago boarded up but now destined one day to form part of the new venue.

The project has been a major undertaking for the Wig & Pen management but co-owner Malcolm Schooling believes it will signal the start of an exciting new dimension for the Cathedral Quarter. "There was a lot of kerfuffle about our plans and I can understand that it upset some people. But the city council wanted diversification in the square and they needed the private sector to take the risk and do it," he says.

"We're a well-respected business, which has helped, and we're not moving away from that formula."

Work started seven weeks ago and has been continuing behind the scenes – head chef Alex Shaw arrived one day to find his kitchen wall had disappeared but it was boarded up and cleaned in time for business as usual.

A new roof has now been installed over the yard between the bar and the former offices behind it and a new staircase installed to link the two buildings. "After all these months of planning it's really exciting to see it all coming together – and the view is just fantastic," says Malcolm.

The restaurant will close for up to two weeks from the end of May and the new Dining Room at the Wig & Pen will open mid-June.

The upper floor and Campo Lane section will then form an extended bar and a salon privée, with a 50-cover restaurant below overlooking the square and an outdoor seating area.