How peachy is life on the public markets?

Dominic Walsh offers a mea culpa to Revolution Bars Group CEO Rob Pitcher over his acquisition of Peach Pubs - but questions the concept of continuing to run it as a public company

I have an apology to make. In my October 2022 column I had something of a pop at Rob Pitcher, the Revolution Bars Group chief executive, for acquiring the Peach Pubs business. While the 21 pubs (now 22) are an excellent business (albeit slightly diminished by being put through sale and leasebacks), well run and with a good product, I did pose the question as to why Revs was buying a portfolio of country pubs to go alongside its Revolution and Revolución de Cuba late-night venues. Surely there were more appropriate targets like The Alchemist and the New World Trading Co? Perhaps, but I answered my own question by pointing out that these are bigger businesses and Revs would struggle to raise the money.

That said, the Revolution chief executive did put together a good case for buying Peach (accepting that not buying something was a non-runner). It was, he pointed out, a “transformative opportunity” that “broadens our guest base, balances our day part sales and seasonality whilst providing another avenue for growth both organically and by acquisition”.

If it had been The Restaurant Group buying Peach – as it almost did a few years back – the rationale would not have needed any explanation. The pubs would immediately have slotted seamlessly into TRG’s Brunning & Price pub business: job done. Yet somehow, to my mind at least, combining late night vodka and rum bars with country pubs just didn’t seem to fit. Maybe it was me but I didn’t quite get it. I’m not sure the creation of “a more balanced and diversified business” cut the mustard for me. Are you telling me that until the takeover of Peach, Revs had been an unbalanced business? Perhaps Rob had a cunning plan that would bring out the best from the Peach and Revolution businesses.

Re-reading that last line, I now appreciate how sarcastic it sounds and I am happy to apologise for my somewhat churlish comment. Rob is a top quality CEO, and if he was running a different business, I am sure he would surely get the credit he deserve. In its recent trading update, the Peach Pubs and Revolución de Cuba businesses both traded positively and the fly in the ointment was the Revolution-branded vodka bars. Typically, he didn’t shirk his responsibilities, but took the punches squarely on the chin and closed the eight underperforming venues for good. No pussyfooting about: by closing the loss-making sites Rob gave the remaining business the best possible chance to come out the other side.

I do wonder about the future of Revs, though. In particular, I question the concept of continuing to run a business with 58 bars and 22 gastropubs as a public company, with all the costs and time spent maintaining that status. When a small-cap stock like Revs is moving smoothly through the gears of growth, a stock exchange listing is (possibly) acceptable. But when a small listed company spends much of its time simply getting smaller, the group’s bosses need to decide whether there is any logic or rationale to what they’re doing.

Like The Restaurant Group, Revs owns two excellent businesses alongside a slightly duff one. The similarities don’t end there. Like TRG, Revs has spent a considerable amount of time trying to whittle down the duff business to focus on the strong Revolución de Cuba and Peach divisions. Based on what happened at TRG, the outcome will be a deal to exit the non-performing duff business, quickly followed by a sale of the rest of the business to private equity.

Don’t get me wrong. I’m not saying that I want Revolution Bars to go private. After all, most of the companies I cover are listed entities, and when they get taken private they more often than not end up disappearing from view. So City Pub Group has been swallowed up by Young’s; Fulham Shore (Franco Manca and The Real Greek) has been gobbled up by Toridoll Group, of Japan; and TRG has been taken over by the buyout firm Apollo. So all things being equal I’d rather Revs remained a PLC than see yet another slice of my sector disappear from view.