Revolution Bars , a UK hospitality operator, today released their interim results for the 26 weeks ended 31 December 2022, demonstrating a rise in sales figures, but equally facing a series of macroeconomic challenges that impacted profitability during the period.
The company reported a total first-half sales figure of £76m, an increase from £74.1m, led by a strong performance over the festive season.
However, operating profit was down for the company, decreasing to £3.1m for the six months ended 31 December, from £6.7m. Adjusted EBITDA was £9.8m in the period, falling from £12.2m. Revolution Bars reported a loss before tax of £0.1m, compared to a profit before tax of £4.3m a year earlier.
The group faced continuous and varied external headwinds impacting profitability during H1 FY23, including transport strikes, a downturn in consumer confidence as a result of the cost-of-living crisis, record hot weather, as well as cost inflation. However, the company noted that energy prices and consumer confidence are trending in the right direction more recently.
In more positive news, the company added that there is evidence of their brands resonating with guests following record breaking like-for-like pre-booked party revenue over the festive period, refurbishments performing well, and the latest new bars performing in line with expectations.
During the period, the company also seeked to diversify earnings away from a late-night and city-centre focus by acquiring The Peach Pub Company Limited and its subsidiaries.
The Group said that synergies are on track and additional growth opportunities were being identified. Revolution had net debt of £23.1 million as at 6 March 2023, made up of £27.0 million drawn down revolving credit facility and £3.9 million cash, with £6.9 million headroom available on the facilities.
The board expressed confidence that the company would attain an APM adjusted EBITDA in line with market expectations for the 2023 financial year.
Rob Pitcher, Chief Executive Officer, said: "We have faced well documented macroeconomic challenges which impacted profitability in the half year. The team have done everything they can to mitigate the cost headwinds and other factors outside of our control, and I am immensely proud of our people for delivering an amazing Christmas to our Corporate guests, delivering an all-time record of pre-booked sales for the Group. Walk-in custom was hampered by industrial action, reduced consumer confidence and the hot summer, and we look forward to increased guest confidence in the coming months as energy prices continue to fall from their previous peak and inflation abates.
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Revolution Bars have demonstrated a mixed bag of results for H1 FY23, having been impacted by economic circumstances outside of their control.
This being said, the company is navigating the current economic landscape to the best of its ability, noting the implementation of energy reduction strategies such as installing cellar energy reduction equipment across 80% of the estate, estimated to save around 6,000 kw's in energy use. Alongside this, Revolution Bars said that a new broker has been instructed to assist with the energy purchasing strategy, and the company noted wholesale energy costs reducing recently.
Aside from energy reduction strategies, the overall direction of energy prices is looking more positive. In February, the energy regulator Ofgem lowered its energy price cap for April to June 2023 to £3,280, which is nearly £1,000 lower than the cap set in January, illustrating a drop in wholesales prices.
On top of this, Revolution Bars are most likely set to see progress in the coming year, with consumer confidence having bottomed out, as recent data showed that February pointed to the highest reading since April 2022.
Overall, early indications show that the trading environment should improve for Revolutions Bars and the board remains confident that the business is on track to achieve market expectations for FY23.
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