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Morning Briefing for pub, restaurant and food wervice operators

Tue 16th Apr 2024 - Revolution Bars Group sets out three-year strategic focus, expansion proposed to recommence in FY27
Revolution Bars Group sets out three-year strategic focus, expansion proposed to recommence in FY27: Revolution Bars Group – the operator of the Revolution, Revolución de Cuba and Peach Pubs brands – has set out its proposed strategic focus for its next three financial years, which will see it curtail its expansion plans until FY27. It follows the completion of its £12.5m fundraising and is dependent on execution of its restructuring plan. In a circular to shareholders, the Rob Pitcher-led business, which has also launched a formal sales process, said: “Following completion of the fundraising and implementation of the restructuring plan, the board believes the positive guest and brand metrics across the group’s portfolio will enable the group to benefit from improving market conditions. Furthermore, the board believes that the improving economic and market dynamics with rising consumer confidence and falling inflation provide a platform for the recovery of the group’s business. The board also believes that the group’s experienced management team has the sector credentials and expertise to drive medium term growth through like-for-like revenue improvement and expansion of the group’s portfolio, while significantly reducing group leverage.” The group’s proposed strategic focus for FY25 will include executing the restructuring plan, rationalising its trading estate and protecting the group’s liquidity; continuing the “premiumisation of Peach Pubs’ product and service”; and “continuing the enhancement of Revolución de Cuba’s entertainment and brand proposition”. In FY26 its proposed recommencing the five-year investment cycle for the group’s bars, with a target return on capital employed (ROCE) of 50% from refurbished sites; recommencing the seven to eight-year investment cycle for the group’s pubs, again with a target ROCE of 50% from refurbished sites; and exploring site acquisition opportunities across the Peach and Revolución de Cuba brands. For FY27, it plans to recommence the expansion of the group’s brands, with a focus on Peach, Founders & Co and Revolución de Cuba. It said: “The board believes there is medium and long-term site growth potential across Peach, Founders & Co and Revolución de Cuba given the strength of their respective propositions.” On Peach Pubs, the company said: “The board is currently seeing a number of high-quality investment opportunities in the leasehold food-led pub market, either as single site or multi-site portfolio expansion opportunities. The group’s key focus is on locations in prosperous towns, with the potential to achieve more than £200,000 site Ebitda per site. Typical sites are expected to require approximately £1m initial capex investment and £250,000 opening costs, with an expectation that in some cases landlords would fund approximately 50% of the initial capex required. Target areas include Winchester, Bristol, Bath, Cheltenham, Worcester and Brighton.” On Founders & Co, it said: “The board believes that the success of the group’s first site in Swansea supports the roll-out potential of Founders & Co. Several locations have been evaluated including very progressed discussions regarding a site in Sheffield. A typical new site is expected to require approximately £1m of capex investment and £250,000 of opening costs with a four-year target pay back on this investment. The board believes that there is a broad range of target locations across the UK subject to availability of sufficient funding.” On Revolución de Cuba, it said: “While the group’s priority in the medium term will be the expansion of Peach and Founders & Co, the board believes there remains capacity in the UK for expansion of its portfolio of Revolución de Cuba sites. In particular, the board believes there is potential for site expansion across London together with other target cities such as Brighton and Edinburgh. The board considers that the UK could support a portfolio of 30 Revolución de Cuba sites. Furthermore, the board believes that there is potential to consider converting certain Revolution Bars sites into Revolución de Cuba sites to mitigate the initial capex outlay.” Revolution Bars Group features in the Propel Turnover & Profits Blue Book, the latest edition of which was sent to Premium Club members on Friday (12 April). Revolution Bars Group’s turnover of £152,551,000 for the year ending 1 July 2023 is the 72nd 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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