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Morning Briefing for pub, restaurant and food wervice operators

Mon 25th Mar 2024 - Sky News: Revolution Bars in secret talks about sale and mass venue closures
Sky News – Revolution Bars in secret talks about sale and mass venue closures: Revolution Bars Group, the operator of the Revolution, Revolución de Cuba and Peach Pubs brands, is plotting the closure of a quarter of its venues as it holds talks with investors about an emergency fundraising and puts itself up for sale, Sky News reports. The business is drawing up plans to axe roughly 20 of its worst-performing bars and has also been sounding out investors in recent days about a cash call to raise approximately £10m – more than the company’s current market capitalisation, the report said. One investor approached about the prospective share sale said it appeared to be dependent upon the successful implementation of a restructuring plan to close sites, it said. Without those taking place, the survival of the company would be in doubt with insolvency the only likely alternative, they added. A significant number of jobs will be put at risk by the closures, which are expected to be concentrated on the Revolution-branded chain. About 2,500 people work for the group, which floated in London for the second time in 2015. It was previously owned by the private equity investor Alchemy Partners. It was unclear on Monday how many redundancies would arise from the restructuring, if it takes place, but one leisure industry source said it would be "in the hundreds". Cavendish, the investment bank, is understood to be working on the capital-raising. An accelerated sale process to flush out interest from potential buyers of the company is also set to be launched in the coming days. The company said in January that it would shut eight sites, blaming declining spending among younger consumers. In a trading update later that month, it warned on profits but said it had had its best Christmas trading period for four years. At the end of January and ahead of The Budget, chief executive Rob Pitcher told Propel there was a “real danger” of there being no late-night economy for young people to come to once the cost-of-living crisis abates – unless the government takes action. Pitcher said the fact the group is having to close eight of its sites and Rekom was putting parts of its business into administration should act as a wake-up call to those in Downing Street. “Our performance at Christmas showed that we have a good business, but the impact of the cost-of-living crisis on the younger generation is having a real impact on the late-night sector as a whole,” said Pitcher. “We saw after covid, when Generation Z had money in their pockets, that they flooded back. The fact is right now, they simply can’t afford to go out as much as they want to – and our Revolution business in particular is seeing that impact. It’s clear the younger generation will come back when they have money again, but there is a real danger that by then, there won’t be a late-night economy for them to come back to. Inflation might be coming down, but other costs are rising – and fast. Labour and business rates are impacting us by another £4m-£5m and the government has to understand that businesses do not have a bottomless pit of money. On top of that, there’s fresh train strikes this weekend. All this has led to us shutting eight bars and cutting our capital expenditure to the bare minimum. The government has got to step in and do something. It needs to understand this can’t continue and give us a level playing field.” Shares in Revolution Bars Group closed unchanged today (25 March) at 2.9p, giving it a market cap of £6.67m. The shares have fallen by 57% over the last 12 months. Revolution Bars features in the Propel Turnover & Profits Blue Book. Its turnover of £152,551,000 for the year ending 1 July 2023 is the 70th highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email to upgrade your subscription.

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