The group’s H1 trading update revealed trade in 2024 had “started softly”, with inflationary increases, rising business rates and payroll costs “significant additional burdens and barriers to growth.”
As the business continues to “manage costs tightly”, the board now expects IAS 17 earnings before interest, taxes, depreciation and amortisation (EBITDA) to be between £3m and £3.5m.
The group’s net debt as of 23 January 2024 stood at £20.3m, which it said was “well within” its facility with NatWest.
However, in a bid to “significantly reduce” capex expenditure to reflect the lower EBITDA, the group, which operates 58 bars ad 22 gastropubs, stated it would be deferring all refurbishments until trade improves.
This comes as the group previously reported overall like-for-like sales were up 9% in the four weeks to 31 December, its best festive period since 2019.
The group’s Revolución de Cuba arm saw double digit like-for-like growth in the four weeks to 31 December 2023, with pre-booked party revenue up 26% against 2022 as corporate Christmas parties returned.
Moreover, Revolution’s Peach brand has continued to see strong trading and its market hall and bar in Swansea, Founders and Co., was described as being “well positioned for growth”.
However, the report explained younger consumers, to which the brand appeals to, continue to “disproportionately experience the cost-of-living-crisis”, causing the Revolution brand to “underperform”.
Revolution Bars Group CEO Rob Pitcher said: “have been delighted with the strong growth over the festive period.
“It was pleasing to see our Revolution guests experience their first uninterrupted Christmas since 2019, driving growth for the brand.
“However, Revolution’s younger guests are still feeling the disproportionate effect of the cost-of-living crisis.
“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.
“I’d like to thank our teams for all their hard work in making the Christmas period such a success and look forward to the point when the cost of living abates sufficiently for our Revolution guests’ disposable income in particular to improve. “
The group expects to announce interim results for the 26 weeks ending 30 December at the end of March 2024.