Over the past four years, the group said it has encountered significant hurdles, including the pandemic, inflationary pressures, and labour shortages.
As a result, it has explored strategic options, including the restructuring plan, fundraising, and formal sale process, to ensure the company’s viability.
The restructuring plan, if implemented, will affect Revolution Bars Limited (RBL), which holds 38 Revolution branded sites, six sites that are already closed, one Playhouse site and one Founders & Co site.
It will focus on exiting leases of loss-making sites and implementing rent reductions to restore profitability. This is currently anticipated to be 18 sites, of which 6 are already currently closed. A rent reduction on certain sites is currently expected to be 14 sites.
The strategy aims to return the company to profitability by improving EBITDA, reducing debt, and enabling a recommencement of the refurbishment program.
The board expects this plan to create a £3.8m improvement in Adj. EBITDA in FY25 compared to its forecasts without the restructuring plan.
The plan involves convening a hearing to establish creditor classes and voting procedures. Dissenting creditors can be ‘crammed down’ and forced to accept the conditions if certain conditions are met, to try and ensure fairness and stakeholder interests are upheld.
Future strategy
Following the restructuring, the company plans to execute a strategic focus for the next three financial years. This includes maximizing CRM databases, enhancing brand propositions, reducing leverage, and exploring expansion opportunities across its brands.
The board sees growth potential in expanding Peach Pubs, Founders & Co, and Revolucion de Cuba sites.
Specifically, Peach Pubs 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.
A key focus is on locations in prosperous towns, with the potential to achieve more than £200,000 site EBITDA per site. Target areas include Winchester, Bristol, Bath, Cheltenham, Worcester, and Brighton.
For Founders & Co, the success of the first site in Swansea supports the roll-out potential of Founders & Co, with locations 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 priority in the medium term will be the expansion of Peach and Founders & Co, however, the group believes there remains capacity in the UK for expansion of its portfolio of Revolucion de Cuba sites.
In particular, site expansion across London together with other target cities such as Brighton and Edinburgh. It considers that the United Kingdom could support a portfolio of 30 Revolucion de Cuba sites.
There is also potential to consider converting certain Revolution Bars sites into Revolucion de Cuba sites to mitigate the initial capex outlay.
