Revolution Bars braced for ‘sector headwind costs’ hit

Revolution Bars Group, the Manchester-based operator of the Revolution and Revolución de Cuba brands, is bracing itself for higher than expected “sector cost headwinds”.

Shares in the Ashton-under-Lyne headquartered group tumbled 30% following the warning.

In its trading update the group says its underlying sales performance remained positive in the second half of the year, which ends on July 1, with like for like sales growing by 1.7% so far.

But its statement went on: “The company is experiencing the well-publicised sector cost headwinds from the impact of the living wage, the double increase this year in minimum wage, the new apprenticeship levy, as well as the above inflation increase in general business rates. These increased costs will be more than anticipated in the current year.”

The company said it has opened five new Revolucion De Cubas in the last 12 months (and one new Revolution Bar) and while the underlying sales performance of these bars remain on track with an average weekly turnover of £43,000 (net), the bars are taking longer to mature to full profitability than originally anticipated.

“Additionally, two key sites were closed for just under two weeks for major refurbishment (Blackpool in March and Cardiff in May),” it added. “All these sites will make a full profit contribution in our next financial year.”