Food and value driving sales growth, says M&B

By Hamish Champ

- Last updated on GMT

Managed pub operator Mitchells & Butlers (M&B) has said rising demand for food in its pubs helped push sales up during August and...

Managed pub operator Mitchells & Butlers (M&B) has said rising demand for food in its pubs helped push sales up during August and September.

In a trading update published today M&B said same outlet like-for-like sales were "resilient", at 1.3 per cent up in the nine weeks to September 20. This compares with a 1.1 per cent increase in the 10 weeks to July 19.

However, like JD Wetherspoon a few weeks ago, M&B admitted it would need to grow sales by three per cent in 2009 in order to achieve the same operating profit figure likely to be seen for 2008.

In the nine week period under review SM&B said same outlet food sales grew 3.6 per cent, a figure the operator said "represented some slowing from the previous higher growth trends".

However M&B claimed drinks market share gains thanks to a 0.3 per cent rise in bar sales.

The group said two thirds of sales were driven by a food-led visit, while beer sales accounted for a quarter of turnover. The poor summer weather had meanwhile "led to a significant improvement in the trend of bowling and machines sales", although it did not give any details.

Across M&B's residential estate, which accounts for three quarters of the group's sales and includes Pub & Carvery and Sizzling Pub Co, sales growth slowed slightly from the two per cent recorded in the 10 weeks to July 19 to 1.6 per cent in the nine weeks to September 20.

M&B's high street business, which includes All Bar One and Nicholsons, a sales dip of 0.1 per cent was reversed in the nine weeks to September 20, up 0.1 per cent.

The group said its focus on maintaining value was illustrated by average food and drinks price increases of 0.8 per cent in the 51 weeks of the year.

It said the average EBITDA of the 204 Whitbread pubs it acquired last year had "increased significantly" during the period, and average food volumes were up 29 per cent.

Keeping a close eye of cost management - duty rises and staff wages would add at least £20m to M&B cost base - meant the group's net retail operating margins "will only be slightly reduced for the year".

M&B added its net debt at the end of the year would be below £2.75bn, versus more than £2.9bn at the start of 2008.

M&B announces its results for the year to September 27, 2008, on November 26.

The group's shares were down 15.5p at 257.5p.

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