by The PMA Team Mitchells & Butlers, the UK's second-largest managed operator with 2,077 pubs, has enjoyed a strong summer with like-for-like sales up by 6%. Sales growth was led by suburban pub restaurant brands like Harvester, Toby and Vintage Inn, which saw sales rise by 7%. But even on the high street the company fared better than JD Wetherspoon in the 19 weeks to 18 September by increasing sales by 3.9% Wetherspoon's sales were static over the summer. Widening the product range at venues helped boost sales, with Stella Artois achieving incremental sales of 100,000 barrels per annum. The Scottish Courage brand portfolio was also introduced at the start of the year. Chief executive Tim Clarke revealed that cask-ale sales from the regional brewers were 30% up on the year before. "We're in the midst of a huge extension of the cask-ale range," he said. The company revealed that average food and drink prices were 1% lower than the year before. Average gross sales per outlet rose to £15,200 per week. Net operating margins were only slightly below last year, despite £15m of external cost increases. In 2005, however, external costs will rise by the same amount, with the increased burden of additional energy costs of about £4m. "In the pub sector in general, there remains regulatory uncertainty over smoking and strong price competition in the high street," the company stated. "The Mitchells & Butlers business is increasingly focused on the long-term growth of the informal, value-for-money, eating and drinking-out market in residential areas, where our pubs are capturing a disproportionate share." Analysts pointed out that strong sales data had been helped by the transfer of 45 pubs to franchise. Doug Jack, of Lazard, recommending investors to buy Mitchells & Butlers stock, said: "Our positive stance is built around management turning around M&B, a process that includes the exploitation of possibly £50m of annual costs, buying and sales mix improvements by 2008, in addition to licensing reform being an opportunity. "The greatest threat to M&B is a smoking ban in public places, but the probability of this being restricted in pubs is increasing." On the basis of the strong summer trading, Jack increased his profit forecast for 2004 from £176.9m to £180.9m. Arbuthnot analyst Alan Millar said: "Without wanting to take too much away from the management, we anticipate that projected sales growth could slow as the company has passed the anniversary of its sales strategy with all the easy' gains having been made in 2004.