Onwards and upwards

By Hamish Champ

- Last updated on GMT

Related tags M&b Revolution Public house

To suggest it has been an 'interesting' year for Mitchells & Butlers (M&B) would be an understatement. Having seen off the advances of one R....

To suggest it has been an 'interesting' year for Mitchells & Butlers (M&B) would be an understatement. Having seen off the advances of one R. Tchenguiz earlier this year, the group's recent Whitbread pub deals and last week's asset revaluation have positioned M&B in what some believe to be an unassailable position. These days chief executive Tim Clarke is predictably upbeat and firmly 'on message' concerning the future of the group.

"This company has been on a long march to take on the leadership in the UK's eating-out market and we're grabbing the opportunity to continue to lead this social revolution," he said recently, and not for the first time. M&B's claim to being the vanguard in this revolution in eating out has become a bit of a mantra, and mantras are, by their very nature, somewhat repetitive.

The needle might be stuck on the record but few would take issue with the thrust of the group's oft-pressed argument. Investment in its pubs is up, the focus on quality food-led establishments is working well and a range of price points, from bargain meals to more premium end offers, allows M&B to cover more customer bases than a number of its rivals.

Site turnover is on the up, as should be expected. In the mid-90s the average weekly take of an M&B pub was around £6,000, says Clarke. Now that average figure is closer to £17,000. The focus on bigger pubs is helping matters, while the group is selling smaller, less profitable wet-led establishments.

New projects continue to feed through M&B's own 'research & development' pipeline, the latest being Project Tokyo, a music-led pub format being trialled at a couple of the group's venues in London. Other try-outs have included the much talked about Project S gastropub experiment.

Historically M&B was all about beer volumes, selling seven times more booze than food in 1999. Seven years on, M&B's goal of selling nigh-on 100m meals annually appears ever more achievable.

Innovation and value are qualities M&B claims to hold dear, while the emphasis on eating and drinking ties in neatly with the looming smoking ban; M&B is as well-placed as any of its peers to tap into the new 'clean air' environment.

Add to this the fact that the group's shares are on the rise - given a leg up by Tchenguiz's bid earlier this year - and few would blame M&B for indulging in a bit of crowing.

But there is inevitably a caveat to all this feelgood factor stuff.

What next?

Has M&B seen the last of R20/Tchenguiz? The Laurel-owning property tycoon might yet make another move for M&B when the hiatus following his last attempt to snap up the company lapses in November.

In its defence, M&B's investors are remaining loyal, and with management determined to deliver on its promises Tchenguiz will need to significantly raise his original 550p a share offer that was so derisorily rejected by M&B, with some observers suggesting he'll have to stump up between £7 and £8 a share, particularly in the light of last week's estate revaluation.

This seems far-fetched, but then stranger things have happened...

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