Revolution Bars to close 18 sites under proposed restructuring plans
Revolution Bars has announced plans to restructure the business through an emergency fundraising backed by Luke Johnson and the launch of a formal sale process.
Serial hospitality investor Johnson, whose Risk Capital Partners firm backs the likes of All Star Lanes and Brighton Pier Group, also acquired 1.4m shares in Tortilla in February.
The proposed fundraising for the operator of the Revolution, Revolución de Cuba and Peach Pubs brands, would raise up to £10.5m via a placing and up to £2m for a placing and open offer.
The cornerstone investments of £9.5m include £3m from Johnson, £3m from the Robus Recovery Fund and £3.5m from existing stakeholders.
Revolution said the restructuring plan would "primarily impact the Revolution-branded sites".
Under current expectations, the company will exit the leases of 18 loss-making sites, six of which have already closed, and impose a rent reduction on 14 sites to return them to profitability.
The group plans to introduce a refurbishment programme from 2026 and hold off on further expansion until 2027.
Under the proposals, Johnson will join the board as non-executive director with a view to becoming chairman at the company's annual general meeting later this year.
As an alternative to the potential restructuring plan, Revolution has also launched a formal sale process of its shares.
The board has appointed Cavendish to advise on the sale process and FTI Consulting to advise on the merger and acquisition process.
The bar group's interim results for the 26 weeks ended 30 December 2023 revealed profit before tax grew to £3.1m from a loss of £0.1m over the same period last year, while total sales jumped from £76m to £82.3m.
Revolution had initially delayed the release of its results, which led to a temporary suspension in the trading of its shares on AIM, which has now been restored.
Rob Pitcher, chief executive of Revolution Bars Group, said: "Following a period of macro-economic and external challenges which has impacted both the company and disproportionately its Revolution brand's young customer base and consequently our trading, the board has had to consider all strategic options for the group to improve its future prospects and provide the best outcome for all stakeholders.
"After much consideration, the board concluded that a plan to restructure the business, together with a fundraising of up to £12.5m and to simultaneously launch a formal sale process would deliver the best value.
"We are driven by the imperative to deliver to stakeholders a business which is fit for purpose in today's environment, better balanced and financed in a way to provide a sustainable long-term future for the group which, in time, has the opportunity to grow and flourish again."
The hospitality group closed eight bars across England in January after blaming the cost of living crisis for hitting the spending power of its younger customers.
Revolution Bars operates 58 bars and 22 Peach Pubs gastropubs.
