Mitchells & Butlers marches on

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Mitchells & Butlers continued to eat up market share during 2005 and expects overall trading for the year to be at the top end of expectations.In...

Mitchells & Butlers continued to eat up market share during 2005 and expects overall trading for the year to be at the top end of expectations.

In a pre-close trading statement, prior to announcing its full results in a couple of months, the managed pub group said that invested outlet like-for-like sales in the 19 weeks to September 17 were up 4.7 per cent and 4.8 per cent for 51 weeks to the same date.

Food sales across the M&B estate were up ten per cent during the period, while drinks grew three per cent. Total gross margins were "broadly maintained" despite this wine and food growth, the company said, and M&B pubs overall were now taking around £16,500 a week, three times the industry average.

Meanwhile, despite the after-effects of July's London terrorist bombings, M&B's sales growth in the capital grew a respectable 2.2 per cent, although this was clearly down on the previous year's rise of 7.6 per cent.

While 70 per cent of M&B's outlets are situated in residential areas, the group derives 15 per cent of its sales from its bars in central London such as Browns and All Bar One. "The London economy has picked up, thanks to a boost in City prosperity, but people are still very wary," said M&B chief executive Tim Clarke.

Mr Clarke cited the group's purchasing power in food as a major factor in helping to drive growth. "This reflects the fact that we have been getting significant economies of scale through our purchasing policies."

The one blot on the landscape has been the smoking ban trial, rolled out through the group's dozen-plus pubs in Grimsby. Reluctant to go into detail, Mr Clarke said the results had been "entirely predictable".

Pub sales in poorer areas of the town, where food made up ten per cent of turnover or less, had been badly affected by the ban.

Mr Clarke said the government's food-led smoking ban proposals could see "thousands of the country's pubs giving up food altogether" and he reiterated M&B's push for a voluntary ban backed up by legislation.

However Mr Clarke remained bullish regarding M&B's overall prospects and said the group was "well placed to capture further growth".

Analysts believe the group will come under pressure in 2006 as consumer spending continues to decline and margins tighten.

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