Revolution Bars to ‘significantly reduce' spending despite strong festive period
Revolution Bars has revealed it will significantly reduce capex expenditure and defer all refurbishments despite its "best festive period since 2019".
In its H1 pre-close trading update published today (24 January), the operator of the Revolution, Revolución de Cuba and Peach Pubs brands predicted lower EBITDA (earnings before interest, taxes, depreciation, and amortization) into the second half of the financial year, with estimates between £3m and £3.5m.
The group said January trade has "started softly" as consumers continue to "recover from the expense of Christmas", especially amid high inflation.
Revolution Bars said it also expected the increase in National Living Wage from April to pose a "material increase in cost" across its portfolio, which includes 58 bars and 22 gastropubs.
The board stated: "Whilst the business continues to manage costs tightly, the significantly above inflation increases in both business rates and payroll costs set by the government are a significant additional burden and barrier to growth."
That said, the group was boosted by a 9% leap in like-for-like sales for the four weeks from 4 to 31 December 2023, the "best festive period since 2019", with weekly sales of over £1m.
It said the integration of the Peach acquisition in October 2022 for £16.5m has continued to "go well with synergies of £1.5m on track to be fully delivered by FY25", while the Revolución de Cuba also saw pre-booked party revenue grow by 26% compared to 2022.
By contrast, the Revolution brand had "underperformed" as a result of its prime demographic – a younger audience – still being "disproportionately" impacted by the cost of living crisis.
Rob Pitcher, chief executive of Revolution Bars Group, said: "The 2023 festive trading period is our best for four years. I have been delighted with the strong growth in Peach, Revolución de Cuba and Founders over the festive period. It was pleasing to see our Revolution guests experience their first uninterrupted Christmas since 2019, driving growth for the brand.
"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."
The board is due to announce interim results for the 26 weeks ending 30 December at the end of March 2024.
