Mitchells & Butlers cools growth plans

By John Harrington, M&C Report

- Last updated on GMT

Related tags: Orchidaceae, Helvetica

M&B is to focus on converting the former Orchid estate
M&B is to focus on converting the former Orchid estate
Mitchells & Butlers (M&B) is to significantly “temper” its organic expansion as it focuses on converting the former Orchid estate.

M&B has opened 22 new sites in its current financial year in addition to the 173 ex-Orchid units acquired in May. The group had looked to accelerate to opening 50 sites a year, with 40 targeted for the 2015 financial year.

Speaking to analysts, financial director Tim Jones said he expects about 25 to open in 2014/2015, and with a “richer freehold mix”.

“Having completed the Orchid deal, we will temper the pace of the expansion programme within the core M&B estate,” Jones said.

Regarding the 50-site target, he said: “I don’t think that will happen, at least until we’ve digested the Orchid conversions we’re doing.”

The first 10 of the 96 Orchid sites set for conversion to M&B brands are to be completed by Christmas.

Chief executive Alistair Darby told the Publican’s Morning Advertiser​’s sister title M&C Report​: “We will be converting to Ember, we will be converting to Toby, we will be converting to Castle and also hopefully to Miller & Carter. It will be across the portfolio.”

Capital trends

He is “delighted” with the performance of the ex-Orchid sites, which are run “very tightly”.

M&B’s best performing brands have been those with a London bias such as All Bar One, Nicholsons and Castle, which are “benefiting from stronger spending trends” in the capital, said Darby.

Other strong performers are those where M&B has worked hard to win back volume outside London, such as Toby Carvery, Harvester, and the Heartland estate.

M&B reported like-for-like sales growth of 0.1% in the nine weeks to 20 September (food: +0.1%, drink: -0.2%). Darby said M&B’s drink volumes are performing “a bit better than the market”, but described the slowing as “a blip rather than a trend”.

Margins “remain below last year” due to “lower levels of sales and also of spend per head, as we moderate price increases to drive volume”.

Related topics: Mitchells & Butlers

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