M&B urges customers to spend more as it looks to claw back profits

Birmingham pubco Mitchells & Butlers is to subtly encourage its customers to spend more on their night out or a visit to their local as it looks to claw back profits squeezed by wage increases and property costs.

The company’s chief executive, Phil Urban, writing in the group’s half year results statement said margins during the 28 weeks to April 8, 2017 had suffered due to various cost pressures and efforts were needed to turn the situation around.

He said: “As previously announced, margins have been adversely impacted by increased costs, most notably from wage inflation, property costs and exchange rate movements. In order to partially mitigate these costs we have been working hard to encourage our guests to trade up and increase spend per head for a more premium experience.”

Landlords and general managers at the group’s various venues are also being challenged to run their businesses as cost effectively as possible.

The interim results show that while revenues in the period remained positive – rising from £1,096m for H1 2016 to £1,123m – pre-tax profit slipped back from £83m to £75m.

The group’s brand portfolio includes Harvester, Toby Carvery, All Bar One, Miller & Carter, Premium Country Pubs, Sizzling Pubs, Crown Carveries, Stonehouse, Vintage Inns, Browns, Castle, Nicholson’s, O’Neill’s and Ember Inns.

Mr Urban said: “During the half year we have generated sustained sales growth, whilst consistently out-performing the market. This comes from the good progress we have made in our three priority areas: building a more balanced business; instilling a more commercial culture; and driving an innovation agenda.

Overall, we are pleased with the turnaround in our sales trajectory and relative performance against the market. In a challenging cost and consumer environment we will continue to focus on our three priority areas.”

Since the half-year, the group said trading had benefited from Easter falling later this year. In the year-to-date (as at May 13) like-for-like sales have increased by 1.9%.  This builds on the momentum seen in the last twelve months, as a result of the various activities undertaken and despite the challenging market backdrop.

It said it had made good progress against its three priorities – to build a more balanced business; to install a more commercial culture; and to drive its innovation agenda – but had to continue to work at pace and on multiple fronts in order to maintain its market outperformance and offset the increasing cost pressures facing by the sector, in order to maximise long term shareholder value.