M&B pubs doing well but wary of increased costs

Mitchells & Butlers has announced strong performance in the 22 weeks to 16 September - including increased sales since the smoking ban in Scotland.

It says earnings for the year should be at the upper end of its expectations but warned about the impact of ever-increasing energy costs and the minimum wage.

The outlook for regulatory and energy costs is improving although we still anticipate around £14m of additional cost next year ​Mitchells & Butlers statement.

In a statement this morning the company said like for like sales in the 18 weeks to 16 September 2006 had increased by 3.8%.

It said food sales had been adversely affected by the World Cup but had bounced back since.

It said average weekly sales per managed pub were up 6% to £17.5k.

Smoking Ban​The company even said sales in Scotland had increased since the introduction of the smoking ban.

In Scotland, like for likes grew by 2.6% since March - although this was slower than the growth in England and Wales.

Drink sales were down 1% but food sales were 'strongly' ahead at 11%.

The statement said: "The strong volume performance, continued productivity gains and good cost control have enabled us to offset the regulatory and energy cost increases of some £24m and generate net operating margins slightly ahead of last year."​

It added: "Trading conditions in the casual dining market are continuing to improve in line with the long term trends for eating out. Our pubs and our operating formats are ideally placed to capture that growth.

96million meals​"Already over 35% of Mitchells & Butlers' revenue is derived from food, with sales of some 96 million meals in a full year.

We continue to prepare for next year's smoking bans in England and Wales through the extension of non-smoking areas, the development of outside space and, where it is beneficial, by moving to non-smoking throughout prior to the ban.

"Already 185 of our pubs outside Scotland are fully non-smoking."

Costs​"The outlook for regulatory and energy costs is improving although we still anticipate around £14m of additional cost next year, mainly as a result of the increase in the National Minimum Wage to £5.35 and higher energy costs."

It also said the integration of the 239 pub restaurant sites acquired in July from Whitbread, was going as planned.

The company will announce its preliminary results for the year ended 30 September 2006 on 29 November.