The last time The Armchair Trader reported on Revolution Bars, the embattled high-street cocktail joint had nailed-up ‘For Sale’ signs across its estate, was in the midst of a restructuring process and was on the lookout for new funding.
Since then, the bar operator has changed its name to The Revel Collective [LON:TRC], as its CEO, Rob Pitcher explained the name change was, no doubt at the prompting of external image consultants, “[to signal] a fresh start and better [reflect] the businesses and brands within the group.”
- Could EngageXR be a good option for investors in 2025?
- TruFin rebounds from Lloyds Bank contract loss
- Quadrise shares up over 300% in two-months
The aptly-named Pitcher also noted the uncertainty and instability the restructuring process and attempt to sell-off the business may have had on his staff, and suggested that Revolution, sorry The Revel Collective, had turned over a new slate and that the cosmetic change would no doubt assure workers and investors alike
As reported, the AIM-listed, Lancashire-based pub and bar operator had a tough time during the Coronavirus pandemic, which forced many entertainment and retail operators to close-up shop. When we last wrote about Revolution it managed around 80 bars and gastropubs. The Revel Collective now operates around 60 units.
The group initially opened-up a series of bar and music venues in the north of England in the mid-1990s, much loved by the free-spending student population of the era, and then expanded its brand nationally in the coming decade. Apart from its main Rɘvolution brand (with Vodka as the main promoted beverage), the group runs the Revolución de Cuba (Rum) and Peach Pubs brands.
Demographic changes weigh on earnings
Demographically things have changed a fair bit since the 1990s. Students are a lot less flush with cash, and the way young people consume alcohol has changed, with it being less socially-acceptable for the current cohort of 18-to-25-year olds to go binge-drinking than the corresponding cohort of the 1990s – in fact there has been a rise in abstinence among today’s younger generation. The target demographic for The Revel Collective are now more interested in food and ‘experiences’, rather than hedonistic alcohol consumption for the sake of it. The change in tastes was further compounded by the cost-of-living crisis, with many consumers preferring to stay-in rather than go-out to save money.
- Stock recommendations by Bridgewise. Try a free trial of Data+ for a deeper look.
The Revel Collective welcomed a flush of new blood into the boardroom in the past few months with Gavin George, founder and former CEO of The Laine Pub Company and Charlie McVeigh founder of craft beer emporium, The Draft House, sold to BrewDog in 2018, both joining as non-executive directors – which may suggest a future direction of travel away from debauched vodka-fuelled nights, to the more thoughtful craft beer experience. Prior to George and McVeigh’s appointments, Luke Johnson of Pizza Express fame joined as chairman in September. Johnson brings his private equity experience to the boardroom table.
The company managed to dig itself out of a financial hole, for the time being with a placement of 1,267,768,705 new shares at the beginning of September which supported GBP12.5m of emergency funding and a restructuring of its debt which alongside closing 18 sites, the company said will deliver a significant annualised EBITDA improvement of around GBP3.8m.
Rejection of attempted takeover
However, it was touch and go with the company suspended from trading on AIM for nearly two weeks in April. The company said it received more than 30 enquiries to buy the group from rivals, with one firm offer from rival Nightcap, which runs 46 bars nationally and was until July also a constituent of the AIM market. Revolution (as it was at the time of the offer) rejected the offer. Some shareholders grumbled that a merger of the two businesses, rather than the highly-dilutive refinancing plan would have been preferential, but Revolution’s management (including Johnson who contributed GBP3m to the refinancing) said that Nightcap’s offer was “incapable of being delivered” as it was “highly conditional”, although Nightcap expressed its surprise as its lawyers told it the contrary and blamed Revolution for not supplying the required information for it to fully-appraise Revolution’s business.
The Revel Collective had its restructuring plan approved by the High Court in August, with support from its lenders, and the new board must now think that the chapter has eventually closed. Dealing with the selling the business isn’t a new thing for Revolution. Seven years ago, Deltic Group (now known as Rekom UK), a hospitality investor, tried to buy the group, but Deltic’s proposal was rejected by management, with the group saying it preferred following-up a potential GBP101m acquisition by Stonegate Group, the UK’s largest pub company. This never materialised and the company is now worth just over one-tenth of that figure.
As anticipated, trading during the latter part of the year ending June 2024 was impacted by the uncertainty and distraction of the restructuring process. With the now-concluded formal sale process, refinancing and fundraising exercise concluded, which was been the main focus for the group’s board, it is hoped that they will now turn their attention to rebuilding the group.
The group’s shares opened the week at 0.8157p, down 75.7% over one-year and down 84.4% over the year-to-date with The Revel Collective’s shares ranging between 0.75p and 6.19p over a 52-week period. The company has a market capitalization of GBP12m,
In a recent statement, management said that it was expecting EBITDA outturn at the FY24 financial year end of around GBP3m after rental charges, and net bank debt was as at 8th August GBP23.8mn, excluding lease liabilities and before the receipt of the net proceeds of the fundraising. The Revel Collective hopes to publish its results for the year to end-June 24 later this month.
