SHARES in Revolution Bars plunged nearly 20% this morning after the hospitality group revealed it will close eight of its least profitable outlets to reduce future site losses and declared the macroeconomic trading environment continues to be challenging - despite reporting its best festive season in four years.
The group, which operates a string of cocktail bars and gastro pubs across the UK, reported its best festive season since 2019, with group like-for-like sales up 9% for the four weeks from December 4 to 31. It noted that its Revolucion de Cuba and Peach Pubs had “performed well” and added that group like-for-like sales for the first half, including New Year’s Eve, continue to “demonstrate an improving trend”, though “remained negative” at -2.8%.
Revolution said that despite a “strong” festive period, the macroeconomic trading environment continues to be challenging and was having a “disproportionate” impact on its younger customers.
And it warned of the challenge presented by a material rise in the national living wage, which will go up by 10.8% in April.
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The company said it will close eight of its least profitable to reduce losses as part of an ongoing review of its estate. The outlets affected are Revolution Bars in Beaconsfield, Derby, Reading, St Peters Liverpool and Wilmslow, Revolución de Cubas in Sheffield and Southampton and the Playhouse in Newcastle-Under-Lyme. Revolution said talks are under way for five of the eight bars to be transferred to other operators or their leases rescinded.
It said it was working on redeploying staff members affected to other roles within the group Following the closures, Revolution will operate 58 bars and 22 pubs.
Chief executive Rob Pitcher said: "We have had the best festive trading period for four years with all of our brands recording positive like for like sales and Revolución de Cuba being the standout performer.
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“However, our younger customers are still feeling the disproportionate effect of the cost-of-living crisis and the national living wage will increase materially in April 2024. Therefore, we have taken the difficult yet ultimately beneficial step for the Group to close several bars which are unprofitable.
“Our teams do a terrific job in making guests welcome and giving them a great experience and again we have demonstrated that when our customer base can afford to do so, they are choosing to celebrate with us, and we have delivered record levels of guest satisfaction. This should bode well for the future."
Revolution said net debt stood at £18.3 million on January 4, which it said was below the level reported in July 2023.
Shares had modestly recovered by 10.25p, and were trading at 4.6p, down 15.6% on the day.
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