Revolution reduces capex, as it shares brand sales

The operator of 58 bars and 22 gastropubs is set to significantly reduce capital expenditure to reflect a revised EBITDA forecast for its financial year.

The Revolution Bars Group board says it has had to reconsider previous assumptions of like-for-like growth in the second half of its financial year, sighting significantly above inflation increases in both business rates and payroll costs as just two of the reasons.

Along with rail strikes as another impact, Revolution's board now expects IAS 17 EBITDA to be c£3-3.5m, so is significantly reducing its capex to reflect this until it sees trading improve. It recently announced it will close eight of its least profitable sites.

The business, which trades under the Revolution, Revolución de Cuba, Peach Pubs and Founders and Co. brands, has also provided updates on its half-year performance. 

Group like-for-like sales for the four weeks from 4 to 31 December were up 9%, the best festive period since 2019. However, while group like-for-like sales for H1, including New Year’s Eve, were down -2.8%.

"The 2023 festive trading period is our best for four years," says Rob Pitcher, CEO of Revolution Bars Group. "I have been delighted with the strong growth in Peach, Revolución de Cuba and Founders over the festive period. 

"Revolution’s younger guests are, however, still feeling the disproportionate effect of the cost-of-living crisis. Looking forward, both business rates and national living wage will increase materially in April 2024 and therefore we have had to take the view that, with inflation remaining high, the recovery for the Revolution business, our largest brand, will take longer than we had previously forecast."

Brand performances

Peach
Following opening its 22nd Peach pub in November 2023, the brand delivered its best ever Christmas trading period, with three consecutive record weeks during December, achieving weekly sales of over £1m for the first time. Integration of the Peach acquisition continues to go well, with synergies of £1.5m on track to be fully delivered by FY25.

Revolución de Cuba
As corporate guests returned to Christmas parties in full this year, for the first time in four years, pre-booked party revenue grew significantly by 26% versus 2022. As a result, significant double digit like-for-like growth was achieved during the four weeks to 31 December.

Founders and Co.
The artisanal market hall and bar in Swansea continues to go from strength to strength, delivering double digit like-for-like growth every month in FY24 to date, as it continues to build on its status as a community hub for like-minded guests. This concept is now well positioned for growth.

Revolution
Christmas delivered a welcome boost for the Revolution brand and the business saw corporate guests returning to enjoy themselves and help to deliver positive like-for-like growth with solid pre-booked sales growth for the festive season of 11%. Nonetheless, it remains clear that the younger guest to which this brand appeals continues to experience, disproportionately, the cost-of-living crisis pressurising their discretionary income, causing the Revolution brand to underperform.

The board expects to announce interim results for the 26 weeks ending 30 December at the end of March 2024.

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