Revolution Bars Group has reduced its weekly bills to approximately £400,000 through a series of cost-cutting measures – including getting suppliers to agree to extended credit and payment terms.
The premium bar group operator, which runs 74 sites, said it was receiving assistance from suppliers regarding contract suspensions, as well as more flexible payment conditions to help it cope with the coronavirus crisis.
CEO Rob Pitcher said the chain remained “very grateful” to partners for their support in helping it to reduce its running costs and secure the future of the business.
Like most operators, Revolution was forced to temporarily shut all its stores on 20 March, when the government announced the closure of the hospitality and leisure sector to deal with the pandemic.
Since then, Revolution has been working to mitigate the impact of closure and preserve cash, including negotiating with landlords on rent relief, cutting capital expenditure and reducing board-level salaries by 50%.
Some 98% of its 2,800-strong workforce have been furloughed through the government’s Coronavirus Job Retention Scheme, enabling staff to keep their jobs while delivering a considerable payroll saving.
It is also receiving the government-backed 12-month business rates relief and deferring all PAYE and VAT payments from 18 March for three months.
Mr Pitcher said the measures had “significantly” reduced the group’s weekly running costs to approximately £400,000 per week and management would continue to seek further cost reduction opportunities.
“Costs will be kept to a minimum until the group’s bars can reopen given the ongoing uncertainty as to the length of the enforced closure period and how trading may be impacted by any ongoing restrictions when trading is able to recommence.”
Revolution has also renegotiated the completion terms of a transaction to surrender five leases to its landlord Aprirose, which was originally announced in January.
The completion payments have been reduced from £3.64m to £2.25m and deferred payment terms agreed for more than half of the reduced amount, which saved a cash outflow in March of £2.8m.
Additionally, its lender NatWest has agreed to increase its revolving debt facility from £21m to £30m until 31 August 2020, following which it will step down to £24m as it begins to benefit from its normal positive working capital cycle following an assumed recommencement of trade in July 2020.
Mr Pitcher said the additional facility, agreed on normal commercial terms, will provide additional liquidity, headroom and financial flexibility to support the business through this difficult period.
“Prior to this crisis, we were delivering positive like-for-like sales, had significantly reduced our debt position, were generating strong Capex returns, and were on track to meet our full year profit expectations,” he said.
“We welcome and are delighted with the additional support from NatWest at this difficult time. They have acted as a true partner to our business and this decisive action has enabled us to be another step closer to being well-positioned to emerge from this crisis.”