Six Revolution bars are set to close their doors for good, putting 130 jobs at risk as sales halved with UK bars now forced to close at 10pm.
Revolution Bars Group (RBG.L) also became the latest struggling operator to confirm it would launch a company voluntary arrangement (CVA), a mechanism that allows companies to get out of lease commitments or reduce rents.
The move will affect a subsidiary of the company, Revolution Bars Limited, “in order to reduce the size of its estate and rental cost base and improve the profitability and return on capital of the Group over the long-term.”
CVAs are a controversial mechanism under insolvency law that allow companies to escape lease commitments or force rents lower.
The group, which operates 73 Revolution and Revolucion de Cuba bars across the UK, said creditors would vote on 13 November on the deal.
The six sites to close have not yet been confirmed, but are expected to be announced later on Tuesday.
It blamed the 10pm curfew and regional lockdowns as it revealed its sales were down to just 49.4% of last year’s levels in the five weeks to 24 October.
They had been trading at 72.5% of last year’s levels throughout July and August, ahead of the board’s expectations.
“Given the latest government restrictions under which the Group is operating, the Group's trading outlook is uncertain and based on all the information and commentary available, the Board now anticipates that the important Christmas trading period will be severely compromised and any return to near normal levels will not be possible before next spring at the very earliest,” it said in a statement on Tuesday.
A review by the company found 13 Revolution sites were significantly under-performing, over-rented, and/or not expected to generate future profitable returns.
Under the terms of the proposed CVA, RBL will close six bars and seek to secure “materially improved” rental terms on seven more.
The plans are expected to boost annual cashflow by £2m ($2.6m), excluding the costs of implementing the CVA.
Rob Pitcher, chief executive, said: "Throughout this extended period of distress caused by COVID-19, the Group has sought to prioritise the health and well-being of its staff and customers, minimise its cash consumption, maintain good levels of liquidity to ensure its ongoing viability and to be in a position to take advantage of opportunities that may arise once restrictions are lifted.
“The CVA proposed by the Group's Revolution Bars Limited subsidiary entity, if agreed by landlords, is another proactive step to lower outgoings to help safeguard the future of the Group and improve long-term performance."
The company’s shares slid more than 4% in early trade on Tuesday.
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