Price drop buoys M&B sales

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Dropping prices by 4% has helped Mitchells & Butlers, operator of brands like Harvester and All Bar One, boost its like-for-likes by 5% in the...

Dropping prices by 4% has helped Mitchells & Butlers, operator of brands like Harvester and All Bar One, boost its like-for-likes by 5% in the first 18 weeks of the financial year. Suburban and rural pubs, accounting for 70% of the estate, enjoyed a 6.4% increase in like-for-likes with high-street and central-London pubs up 2.2%. Total volumes of food and drink increased by 8% for the period. Gross margins dropped by between 0.5% and 1% because of reduced prices, although gross profits were ahead of last year. Chairman Roger Carr said: "Overall, we are making good progress through our sales-led strategy to deliver sustainable customer value with a tight focus on managing costs and enhancing mix." Analyst Douglas Jack, of Panmure Gordon, said: "Against weak comparatives [earnings per pub fell 7% last year], M&B's strategy of refurbishing under-performing assets and applying targeted promotions is appropriate. We believe the need to apply incremental promotional activity is waning." Geof Collyer, of Deutsche Bank, claimed M&B had to address the problem of excessive overhead per pub. "M&B's overhead per pub is more than 20% higher than at Greene King, a pub division with barely one-quarter of the estate of M&B," he added.

Related topics: Mitchells & Butlers

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