Revolution Bars warns on profits amid venue closures and cash crunch
Revolution Bars has slashed its profit expectations for the year in the face of bar closures and cash strapped youngsters ditching night outs.
In a trading update, the nightlife operator said it now expects EBITDA to be £3-3.5m, down from a range above £5m.
Shares fell over 19 per cent this morning as investors responded to the news.
The board delivered the warning despite reporting its “best ever” Christmas following the pandemic.
Group like-for-like sales rose nine per cent and pre-booked party revenue grew significantly by 26 per cent on last year’s figures.
However, Rob Pitcher, chief executive of Revolution Bars Group, said that Revolution’s younger guests are still feeling the “disproportionate effect” of the cost-of-living crisis.
He said: “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.”
Earlier this month, Pitcher said he would close eight underperforming sites because of youngsters scaling back.
Bars across Southampton, Reading and Liverpool will be impacted, but no sites in London will close.
The brand’s Cuban themed Revolución de Cuba bars did well, however, thanks to the return of office parties.
“As Corporate guests returned to Christmas parties in full this year, for the first time in four years, pre-booked party revenue (at Revolucion de Cuba) grew significantly by 26 per cent versus 2022 and our refreshed brand proposition delighted party goers who recorded excellent guest feedback scores,” the firm said this morning.
There are widespread concerns that despite the bumper Christmas, pubs and bar spending may not be enough to avert a technical recession.
Spending in December will need to have given the fourth quarter economy a lift into positive territory if the UK is to avoid two quarters of consecutive negative economic growth.