Falling sales and rising costs have prompted bar group Revolution Bars to warn its profits will decline.
The group, which is trying to revitalise its brand to persuade more people to visit its cocktail bars, said adjusted full-year earnings would be £12m, down from £15m the year before.
Revolution put in a good performance over Christmas, with sales in the four weeks to New Year’s Eve up 2.6 per cent on a like-for-like basis, compared with the same period in 2017. But in the 26 weeks to December 29, sales fell 4 per cent.
Shares in Revolution opened down 18 per cent on Monday morning.
Chief executive Rob Pitcher, who joined the business last June after the group had rejected a £102m takeover offer from Slug and Lettuce owner Stonegate Pub Company, said “the problems really lie in the core Revolution brand,” which makes up the majority of the group’s estate and has “traded behind market for some time now”.
Mr Pitcher said the group’s newer Revolución de Cuba brand was doing well. But the group was still working on making the Revolution outlets, which are known for their cocktails, flavoured vodkas and fast food, more appealing to millennials, who favour vegan dishes and nights out that provide experiences.
He said that 45 per cent of the group’s menu was now vegan or vegetarian. “That was a big shift from the previous menu.” He added that Revolution outlets would be more focused in future on what he called “competitive socialising”, a term for entertainment designed by clubs and bars to light up customers’ social media feeds, with activities such as cocktail masterclasses.
“We are investing in better quality entertainment and turning a Saturday night into a bit of a production,” he said. “The days of the DJ in the corner are gone. It needs to be a lot more than that now.”
Revolution’s profit warning comes after multiple UK retailers reported bleak Christmas trading figures, blaming the cautious mood among shoppers. The retail sector suffered its worst Christmas since 2008, the British Retail Consortium reported last week.
Douglas Jack, an analyst at stockbroker Peel Hunt who follows the leisure sector, said Revolution was certainly “not doing as well” as other listed pub groups such as Greene King and Mitchells & Butlers. He added this might be because Revolution’s bars were largely on high streets, where footfall was broadly lower as people shop less.
The high street downturn has “certainly affected our daytime operations”, said Mr Pitcher, as fewer people on high streets meant fewer customers going into Revolution’s bars for lunch or a mid-afternoon drink.