The operator of 74 cocktail bars across the UK under its Revolution and Revolución de Cuba brands revealed that it has been ‘rapidly implementing’ a number of measures to manage the impact of its sites’ closures on 20 March and preserve cash.
This includes the furloughing of 2,775 staff members – 98% of the group’s workforce – and halving the salaries of its CEO, CFO and non-executive directors alongside pay reductions for senior employees who remain at work.
In a statement released on 14 April, the group also revealed that negotiations with landlords regarding rent relief were ongoing, that it has applied for Government-backed 12-month business rates relief and that all PAYE and VAT payments have been deferred from 18 March 2020 for three months.
According to the same statement, the group announced that its measures have already cut running costs to approximately £400,000 per week with management continuing to seek further areas to cut costs.
£9m increase in overdraft facility
Revolution, which as of April 2020 had a net bank debt of £17.8m, also announced that subject to final documentation its lending bank – NatWest – has agreed to increase its overdraft facility from £21m to £30m until 31 August 2020.
From the start of September, this facility will be reduced to £24m following an assumed recommencement of trade in July 2020.
The group also revealed it had renegotiated completion terms of the surrender five leases to its landlord Aprirose – a transaction announced on 15 January 2020.
Completion payments have been reduced from £3.64m to £2.25m with deferred payment terms agreed for more than half of the reduced amount – saving Revolution a cash outflow of £2.8m in March.
More to be done
As reported by The Morning Advertiser before the Covid-19 outbreak, Revolution had harboured ambition to resume expansion plans off the back of a 3.5% increase in revenue for the six months to 28 December 2019
“Prior to this crisis, we were delivering positive like-for-like sales, had significantly reduced our debt position, were generating strong capex returns, and were on track to meet our full-year profit expectations,” Revolution’s CEO Rob Pitcher commented.
“We welcome and are delighted with the additional support from NatWest at this difficult time. They have acted as a true partner to our business and this decisive action has enabled us to be another step closer to being well-positioned to emerge from this crisis.
“We are also very grateful to those other stakeholders, including our employees, suppliers and certain landlords who have approached this crisis in a similar manner, helping to secure the future of this great business.
“However, there is still more that needs to be done to ensure the protection of the 3.2m jobs in our sector along with the £39bn of direct tax receipts paid annually to the UK Government.
“Specifically, this includes more support in connection with property-related costs during this enforced closure period and beyond, including support for landlords themselves and we encourage the UK Government to take swift action in this respect.”