500 M&B pubs may stop food to service smokers

Related tags Smoke ban Beer

by The PMA Team The proposed smoke ban in pubs offering food would force Mitchells & Butlers to end its food service at 500 pubs, chief...

by The PMA Team

The proposed smoke ban in pubs offering food would force Mitchells & Butlers to end its food service at 500 pubs, chief executive Tim Clarke has claimed.

Clarke argued that a much better alternative would be for the Government to allow smokers' snug rooms with proper ventilation.

The 500 M&B pubs ­ a quarter of the 2,000-strong estate ­ that would turn into smoking pubs all have food sales that account for less than 10% of turnover.

"We wouldn't blink an eyelid," said Clarke. "The point we are making is that, sadly, for these it's all-too-easy to choose to go smoking with a minimal profit effect. But it's the last thing we would like to do in terms of long-term positioning."

Clarke added: "We think that a clearly segregated room with proper air-conditioning would actually help achieve the Government's health objectives.

"The provision of a smoking room would lead to far more space in pubs being made available to non-smokers,"

Clarke's comments on the proposed smoke ban came as the company revealed a 5.6% in-crease in its like-for-like sales in the full year to 25 Septem-ber, to bring average weekly takings per pub to £15,200.

Food volumes increased by 8% in the year and beer volumes were up by 4%, thanks an improvement in the range of premium and imported lagers plus regional cask beers. Re-gional and family brewer cask beers saw a 30% increase in sales.

"The New Year will see further benefits from a major widening of the regional cask-ale range," said Clarke.

" I'm a cask-ale drinker myself ­ my favourite is Timothy Taylor's." He added that M&B was seeing customers gravitate towards "high-quality premium beer, whether it's from Munich or Keighley". In addition, non-beer drinks volumes grew by 10%. Wine sales had grown thanks to the "development of own-label wines directly sourced from the vineyards".

Soft drinks' growth had been aided by the expansion of the company's fresh fruit juice range. The average cost of food and drink was down by 2% on the year. "Our approach to improving customer value should leave us well prepared to respond to any slow-down in consumer spending and continuing supermarket price competition," added Clarke.

Turnover was up 3.7% to £1,560m but profit before tax was down 7.5% to £184m because of increased interest payments.

What the analysts are saying

Geof Collyer, Deutsche Bank (BUY): "A year ago, M& B's shares were trailing at the group's relative low point post demerger. As they say, a year is a long time in the stock market and the progress made by the group since has been sparkling.

The assault on the high street peer group has produced a turnaround on what has historically been the group's trading Achilles heel." (Target: raised to 380p from 340p)

Jamie Rollo, Morgan Stanley (BUY): "Its value proposition, improved retail skills and good-quality assets means it is taking clear market share strides in a growing eating out market." (Target: raised from 280p to 340p)

Related topics Mitchells & Butlers

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