The bosses of Revolution Bars Group remain upbeat about the future despite today reporting a loss due to extra costs.
Its operating loss of £3.7 million for the 26 weeks to December, compared to £5.1 million profit in 2016, was impacted by £9.6 million of exceptional costs.
This includes costs incurred by dealing with last year’s failed takeover bid from Stonegate Pub Company and the unsuccessful merger approach by The Deltic Group.
Other exceptional costs included provision for “onerous” lease costs on venues where rental costs exceeded the bar contribution, asset impairment charges, and the change of CEO after the resignation of Mark McQuater in October.
Like-for-like sales for the 26 weeks edged up 0.4% while overall sales rose 11% to £73.8 million after the opening of Revolution bars in Solihull in the West Midlands, Inverness, and Putney in south-west London and Revolución de Cuba in Belfast.
However, the half-year reporting period for 2017 did not include New Year’s Eve as it did in 2016. Adding the week of New Year, like-for-likes sales growth was at 1.9%.
The board also highlighted the underlying figure of adjusted earnings (EBITDA) as being the most representative of performance, rising by 2% to £8.9 million.
They remain confident about the future, with new CEO Rob Pitcher due to arrive soon. Executive chairman Keith Edelman said: “I am delighted with our sales performance in the second quarter and over the Christmas period which shows the clear underlying strength of our business and continues to demonstrate the appeal and potential of our brands.
“New openings are performing particularly strongly, and site refurbishments are delivering healthy returns, meaning the group can pursue its strategy of profitable growth and drive like-for-like sales in its core estate.”
In common with other operators, like-for-like sales since December 30 have been slower than previous years. In the eight weeks to February 24, they were up 3.8%, but in the seven-week period excluding New Year’s Eve, like-for-like sales were down 2%.
Wet sales have generally held up well, particularly at weekends, but the company said it had resisted the temptation to aggressively discount as this was not seen as in the best long-term interests for the premium-positioned bars. Food sales were down.
Another Revolución de Cuba is due to open in Birmingham towards the end of March and in Newcastle-upon-Tyne before the end of June, taking the group up to 74 sites – 58 as Revolution and 14 as Revolución de Cuba.
Contracts have been exchanged for a new Revolution bar in Glasgow, taking over the former site of The Tunnel in Mitchell Street, and two Revolución de Cuba bars in Southampton and Bristol which will open early in the group’s next financial year which runs from the end of June.
The new site pipeline means the board is confident that they will have opened at least six new bars over the 12-month period.
During the half-year, there were significant refurbishments at Revolution bars in Edinburgh, Glasgow and Nottingham Cornerhouse as well as Revolución de Cuba in Sheffield and Derby. A refurbishment is planned for Revolution in York in April.
The board has also seen management changes in the new year including the departure in January of its chief operating officer Jimmy del Giudice, who has been with the business since 1991.
This has led to the group’s two senior operators stepping up to the senior management team: Andy Dyson for Revolución de Cuba and Clinton Ghent for Revolution.
Responsibility for marketing, which previously reported to the chief operating officer, has been shifted to Kate Eastwood, who is now sales and marketing director.
With opportunities for growth in food, particularly in the daytime and early evening, the group recruited a food director, Simon Dobson, in January. He was previously UK managing director of Delaware North which operates restaurants and bars at football stadiums, airports and stations.
Simon’s initial focus will be to revitalise the food offering in Revolution bars, improving its quality, delivery and service standards and aiming to ensure that customers rate Revolution food as highly as its cocktails.