For many, the Revolution bar chain is still synonymous with the term vodka bar, and meeting Mark McQuater at the Reading branch, it’s easy to see why. The chief executive of owner Inventive Leisure points to the dominance of the drinks category on the back bar and even the presence of an ornate vodka cabinet by the wall.
But things are about to change. A new cocktail list for Revolution has more emphasis on growth categories such as rum, gin and other specialist spirits.
“It was highly overcooked, the vodka,” McQuater says. “When vodka’s growing at 10%, that’s fine, but it’s not. The company did traditionally push the specialism in vodka hard, and they may even have called them vodka bars, but the decision was taken that it’s just too narrow a market, too narrow a product, when the real demand and the real growth is beyond vodka.”
Shifting the spirits mix is just one of many changes underway across the 70-strong estate since McQuater took over as CEO from company co-founder Roy Ellis earlier this year. The process is taking place under a programme called Evolution.
Transforming the core estate
McQuater, who was chief executive of managed pub group Barracuda for 12 years, explains: “The company has reached a certain scale operation - we finished the year turning over £111m and it’s growing very rapidly. It’s a successful business, it’s now a national company - we have 2,500 employees - and the theory was there’s a requirement to move the way the business was managed forward, being able to adopt embrace perhaps a more structured approach.
“I’ve got a lot of experience, being in the retail end of managed licensed retail for quite a while. Inventive is a really interesting business and I’ve come up with a nine-point plan, which we’re almost six months into implementing. This is a business that is capable of a higher level of performance and a higher level of growth.”
He adds: “At the moment the principle energy is going back into the Revolution brand, to re-position that to absolutely address the current bar market in 2013 and beyond. We are looking at everything that’s involved in what is a great Revolution bar. It’s a holistic approach.”
Point one of the plan is to “Evolve & Invest”, and the current refurbishment scheme will see more than £7m spent on 28 venues over 10 months. “That’s three a month really, which is a lot. Nobody else in spending in this sector on their core estate at that rate. That means that half the core estate is going to be transformed by next February.”
McQuater discusses some of the changes at the invested sites. “The most obvious thing you’ll notice is that the physical look of the bar is fresher, more contemporary, less dark, with fewer hard surfaces, more textures, cleaner zoning, and better geared up for food and day trade, and with a more exciting back bar.”
He says there’s been a “pretty dramatic difference” at the evolved sites, where sales have grown 20% and profits lifted by about 30%. “And it’s a different crowd that come in,” McQuater points out. “The whole object is to make sure that at the evolved bars they are much more day-friendly.”
Developing a sub-brand
The investment programme is about now one third complete and Revolution Reading is among the next tranche due before Christmas, along with Beaconsfield, Milton Keynes and Leadenhall in the City of London. “A lot of southern sites that haven’t been transformed for a number of years are all getting done,” says McQuater. “The business has traditionally performed a bit better in the north than the south so that’s been another part of the plan to make sure the south gets properly invested.” To oversee this, Gavin Hughes, former operations manager at Novus Leisure, has been appointed regional operations manager for the south.
Step two of the Evolution plan has seen the development of a new sub-brand focused on the late-night sector called Revolution Late, which has been introduced into a handful of sites. McQuater compared the bars, which do not open before 5pm, with a Tesco Metro, featuring a more limited offer including a reduced food menu that’s focused on a particular target market.
He explains: “Some of the bars are in locations, like Hull, that are basically evening locations, and we’ve taken the decision that for these seven or eight bars we’re going to have a sub-brand called Revolution Late. In Revolution Late they will be focusing on the after-five-o’clock experience.
“It’s about recognising that not one size fits every bar in the estate.
“We trialled it in Swindon and that’s been hugely successful. Swindon town centre is a challenging town centre, but the guys can now, rather than having a fairly empty day pitch, close and spring to life - and all of a sudden, come the evening, it works.”
Wolverhampton and Walsall are among the other places to receive a Revolution Late, which operates in a separate space from the standard Revolution. Some of the bars are converted from its Revolucion de Cuba rum bar concept.
“They are some of the original small legacy bars in traditional late night locations where it doesn’t make sense to try and say, ‘you will trade the full brand 24/7’.
“It’s a much more profitable operation, taking out some of the seven-day-a-week brand requirements.” There is flexibility around whether Revolution Late bars open in the early part of the week, McQuater says.
Drinks changes
The third step is to improve the drinks range. Along with the new cocktail selection, a revised wine list has been introduced and the beer range will be upgraded. McQuater says the beer offer has traditionally been “fairly standard” in comparison to the cocktail range.
“We are very keen to get Peroni in. It’s all about spend per head. When we get really busy I’d rather sell a product that’s got a higher spend attached to it than a lower spend per head product.”
The changes won’t mean a big cull of existing brands, but rather the introduction of a “ladder” of premium products. He adds: “All the fridges have been refreshed this month actually, [with] a lot of new ciders, lots of new exciting bottled beers, a few craft beers in there too.”
For McQuater, the late-night business, for which he says Inventive is the envy of its competitors, isn’t really the main battleground. It’s the post-work/early evening period, “where you really are having to offer something that isn’t DJ music/atmosphere driven, and it’s not food driven”, where the true battle exists.
“The evolution is about teeing the bars up particularly so they can hit that spot,” he explains. “At that point - and the early signs are very strong - we will have a superb all round premium brand that they can operate from lunchtime food all the way through to good quality evening trade in sufficient volume, and a perhaps little bit of that more exciting experience after 11 o’clock.”
Focusing on the food offer - point four of the plan - is crucial it Revolution is to reach these heights. McQuater admits the company was a “late starter into the food game” but is seeing “good momentum”, with like-for-like food sales up 10% year-on-year. Some sites can take £20,000 per week in food, he points out.
McQuater says the offer is “really high quality”, with much prepared on-site using fresh produce - “there’s hardly any ‘ping and ding”. The meats are grilled and there’s a focus on stonebaked pizzas, particularly to cater for the evening ‘party food’ market.
It’s not just the products themselves that have been changed. A hosting and waiting service has been introduced to the evolved sites, and McQuater explains why. “Sixty five percent of our customers who come in for an eating experience are girls. They like full table service, they like the freshness of the food and we’re now introducing a range of lighter foods that point to what it is they want. It’s starting to properly match the menu and the customer base.”
Food accounts for around 15% of sales, up from c5% five years ago. McQuater believes the proportion should rise to no more than 20-25%, after which it could become “counterproductive” to the late-night business.
The fifth element of the Evolution programme concerns digital marketing - or rather how to make money from it, a question that has frequently dogged operators in the digital age.
One aim is to increase the proportion of sales that derive from pre-book deposits. It currently stands at 7-8%. “We think we can get up to 25% of turnover, given the amount of business we are doing,” says McQuater. “That will be a steady process, that’s not an overnight piece.”
People approach
The next three steps relate to Inventive’s people strategy. Firstly, refocusing and re-prioritising the support teams. McQuater says that with the exception of finance and IT employees, “everyone else is in the field, dashing around supporting the bars”. “It’s not an office culture we’re encouraging because we want the bars visited.”
Inventive has also been re-configuring some central operations functions to ‘upskill’ in some areas. For example, McQuater brought in Myles Doran, a former colleague at Barracuda, to oversee the drinks range as drinks and retail procurement consultant. “There are other areas we’re looking to upskill as well,” he adds.
A range of new employee incentives are being introduced, with incentivised trips to New York, for example, for area managers who over-deliver. “It’s really making this exciting. That gets these guys up in the morning and bouncing around,” says McQuater.
The final stage relates to expansion “What we’re keen to do is to get this Evolution project over by January/February next year then switch to acquiring some more branches,” says McQuater. Interestingly, the majority of new site acquisitions would be converted to Revolucion de Cuba.
“We would like to do four new bars a year,” McQuater says. “I think [Revolucion de Cuba] would be the majority. Revolucion de Cuba is doing incredibly well in the female market. It hits the professional young female bar goer very, very well. They can combine their drinks, food and dancing in one location.
“We are in 70 branches at the moment, turning over £111m. It could easily get to 100 branches turning over something close to £200m. That’s perfectly possible.
“The next step undoubtedly will be to roll out some of the existing brands - Cuba and Revolution, depending on the sites that come up - and then the acquisition piece could follow that.”
He’s also eyeing the possibility of acquiring an existing branded operator at some point as a bolt-on, although McQuater stresses that he has nothing specific in mind at present. “I think this business is capable of being a premium branded UK bar operator, and therefore at the appropriate moment we’d be looking at acquiring other businesses that are quality brands and developing those,” he explains.
While some joint Revolution and Revolucion de Cuba sites have do work well, the general plan is to focus on single-brand outlets. McQuater says joint sites are “complex to manage” because they combine different offers and price points under one roof. A few sites will be converted to Revolucion de Cubas, including Richmond and Harrogate, he added.
McQuater is upbeat about the opportunities in the property market. Leasehold deals are “easier to do in times like this”, he says. “There are probably more sites available now than there has been for a long time. As retail operations shrink - general retail - there’s going to be space that wasn’t previously available to the licensed trade.”
Inventive is looking for sites in “prominent, affluent county towns”, although McQuater stressed that Inventive works well in cities too.
Acquisitions would need to be in area that fit Revolution’s target market of young professionals or “affluent students”. It may seem unrealistic to imagine too many people falling into the latter category these days, especially with the advent of tuition fees. To make matters more difficult, McQuater says recently universities have offered more places to foreign students who may not have the same bar culture as their British counterparts.
State of the sector
Nevertheless, he believes the student market will “stabilise” over the next two or three years. “It’s still a huge market, and students are single and have an enormous capacity to go out seven nights a week.”
Is he positive about the state of the late-night sector in general? “On yeah!
“We’ve managed to swing back into positive [like-for-like sales] over the last six weeks - we had been tracking negative which was part of the background to me coming in. We are getting an interest in our bars that is stronger than last year.”
But McQuater says some towns, particularly smaller ones where “there’s not enough money”, are finding things more difficult, resorting to “extreme discounting” and reducing the quality of the operation. “We’ve always been at the top end of the market. There’s no discounting at the weekend at all - it’s premium pricing.”
Major changes at the company will, of course, be reliant on the continued support of Inventive’s owner Alchemy Partners, which last year pulled back from attempts to sell the business. Have the team at Alchemy discussed an exit strategy with him? “They haven’t,” McQuater replies. “These things are always a bit unpredictable.
“All private equity needs to get in and get out. I think the main priority is to get this business in great shape first. I think that’s going to take a while to get the benefits of all that feeding through.”
He adds: “There’s a hell of a lot going on here, and it’s just about getting the priorities right, getting the action plans moving through, getting the look right, getting everything in place - then getting more of it, really.” Vive la Evolution.
