Revolution Bars Group has launched a company voluntary arrangement (CVA) of its subsidiary RBL.
The CVA will see RBL - which operates 50 Revolution branded bars - reduce its estate by 6 bars.
The Ashton-under-Lyne-headquartered group, which operates the Revolution and Revolucion de Cuba brands, said cutting its estate will reduce its rental cost base, improving its profitability and long-term return on capital.
The group said, while comparable venue sales have remained ‘buoyant’, they have reduced to 49.4 per cent in the last five weeks due to the 10pm curfew and local lockdowns.
Revolution first announced it was considering cutting its estate last month, as the long-term impact of the latest Covid-19 restriction meant it “must consider all necessary options” to ensure the business is viable.
A review of the RBL portfolio found 13 sites that were either “significantly underperforming” due to location and local conditions, “significantly overrented”, not expected to generate future profitable returns, or a combination of the three factors.
The group said RBL expects to obtain materially improved rental terms on a further seven bars and, where improved rental terms are being sought, landlords will have the option to terminate the lease at various junctures over the next two years.
The remaining 37 bars in the RBL portfolio will not be materially affected, it said.
Chief Executive Rob Pitcher said: “Throughout this extended period of distress caused by COVID-19, the group has sought to prioritise the health and well-being of its staff and customers, minimise its cash consumption, maintain good levels of liquidity to ensure its ongoing viability and to be in a position to take advantage of opportunities that may arise once restrictions are lifted.
“The CVA proposed by the Group’s Revolution Bars Limited subsidiary entity, if agreed by landlords, is another proactive step to lower outgoings to help safeguard the future of the Group and improve long-term performance.”
Revolution Bars said its board now anticipates the Christmas trading period will be “severely compromised” and “any return to near normal levels will not be possible before next Spring at the very earliest”.
