The business that runs All Bar One, Nicholson’s and Ember Inns, among others, has cited the uptick to the return to office working, city centres becoming stronger, tourist numbers recovering and guests enjoying the hospitality sector.
The past six weeks has seen that pattern continue and business has also been boosted by Easter and “gives us optimism for the future”. It added there are indications cost inflation headwinds across the supply chain are starting to abate but are an issue in the near-term.
M&B said energy prices have fallen back from previous market highs and food cost increases are likely to slow.
For the 28 weeks ended 8 April 2023, the group reported total revenue up 10.6% to reach £1,282m (£1,159m: H1 FY22), operating profit of £99m (£121m: H1 FY22, which included Government support initiatives) and profit before tax of £40m (£57m: H1 FY22).
First 10 weeks
The first 10 weeks of H1 FY23 saw M&B make a strong start with lfl sales growth of 6.5%, primarily driven by drink sales and this rose by 10.4% for the quarter (Q1) versus Q1 FY22.
The second quarter (Q2) saw lfl sales grow by 6.4%, comprising drink sales growth of 9.9% and food sales growth of 5.2%.
However, uncertainty and cost challenges across the sector “has had an unavoidable impact on market supply with a 4.3% net decline in pubs and restaurants in the year to March 2023 and a 12.0% net decline since the start of the Covid-19 pandemic in March 2020 (CGA Outlet Index April 2023)”.
The group added independent and tenanted businesses have made up the substantial majority of the net closures but said, given its strong estate and portfolio of brands, it believes it is well placed to continue to benefit from these changes in the competitive landscape.
It has a total estate of 1,717 sites in the UK and Germany, of which 1,645 are directly managed (83% freehold and long leaseholds) and “remains focused on the strategic pillars which formed the foundations of our strong performance both before and after the pandemic”.
Outperformance against the market
During H1 FY23, M&B completed 90 investment projects, comprising 81 remodels, three conversions and six acquisitions.
It added although recruitment challenges face the industry, its employee numbers recovered to pre-pandemic levels towards the end of FY22 and have stabilised through the first half of the current year.
M&B chief executive Phil Urban said: “We are pleased to report a strong first half performance delivering continued like-for-like sales growth and outperformance against the market.
“The trading environment for the hospitality sector remains challenging with inflationary costs putting pressure both on the industry’s margins and disposable income of our guests. However, we are encouraged by the resilience of trade to date, including the most recent six weeks at 8.9% like-for-like sales growth and by early signs of the medium-term cost outlook improving.
“We remain focused on our Ignite programme of initiatives and our successful capital investment programme, driving cost efficiencies and increased sales. Combined with our diverse portfolio of established brands, value proposition, enviable estate locations and talented people, we believe we are well positioned to continue to outperform the sector.”