M&B boosted by food sales
Managed operator Mitchells & Butlers has announced a 1.8% increase in like-for-like sales on last year for the 33 weeks to 15 May.
M&B, which set out plans to ditch its wet-led pubs in favour of food-led venues in March, saw like-for-like food sales rise 4.3% and drink sales 0.3% over the period for its 2,000-strong estate.
Operating profits and profit before tax for the half year (28 weeks to 10 April) increased 12.2% and 55.3% respectively after exceptionals. It also reduced its net debt by £87m to £2.5bn in the first half year. Turnover was up 1.3% to £1,037m in the period.
It expects to deliver £25m worth of efficiency savings for the year — up £5m on previous predictions. The savings helped to deliver a retail operating profit of £158m —up 13.7% for the half year.
The operator, which is selling 300 pubs, shed further light on its plans to focus on food-led pubs. Chief executive Adam Fowle said he believed the shift to off-trade consumption of alcohol would continue as supermarkets use cheap deals to drive footfall.
"Looking forward, we see these trends continuing, compounded by the fact that both duty and supplier costs are increasing faster than general inflation. This reinforces our decision to exit from value orientated, drinks led pubs."
Food focus
M&B has now split its brands between active expansion and selective expansion categories.
It plans to double the size of its "Active expansion" division to over 1,900 sites. The six brands included are Harvester from 171 sites to 400, Toby Carvery from 133 to 300, Crown Carveries from 111 to 300, Sizzling Pub Co from 200 to 400, Premium Country Dining Group from 61 to 150 and Vintage Inns from 237 to 350.
"Our starting point will be to focus on where the investment returns are most attractive, namely the conversion of pubs in our existing estate to these brands; we will then seek to increase their distribution in leisure parks and other high traffic locations such as retail parks with good car parking; and eventually will seek to develop and test small footprint variants of Harvester and Toby on the High Street," said Fowle.
The "Selective expansion" division includes All Bar One (37 pubs), Browns (14 pubs), Metro-Professionals (103 pubs), Miller & Carter (17 pubs), Nicholson's (79 pubs) and O'Neill's (62 pubs).
"We will selectively expand these brands as and when opportunities arise particularly through conversions from within our own estate," said Fowle. "As brands develop and evolve, they may move between these categories, for example, Miller & Carter with only 17 pubs is clearly a brand in its early days, however dependent on how its offer develops we could opt to expand it more actively in the future.
"Our overall objective is to own and operate brands which have the potential to build to at least 100 pubs or deliver an EBIT of more than £10m with an acceptable return on investment. This will enhance the focus of the business and enable better cost efficiencies."
M&B has set aside an additional £20-25m to focus on conversions of existing sites to its focus brands, taking gross capital expenditure to £160m for the year. Its tax bill for the period was £20m.
Underage drinking
The operator also stressed how seriously it takes social responsibilities and highlighted that each month it refuses to serve 120,000 people who are underage or drunk.
"We look to the new government to bring in measures to support the on-trade, which supervises the consumption of alcohol, through creating a level playing field between pubs and supermarkets by tackling irresponsible promotions in the off-trade," said Fowle.
