Pub giant boosted by strong sales as pressure eases

Mitchells & Butlers (M&B) is continuing to rebuild margins after another period of sales growth that surpasses market expectations.

The FTSE 250 company, which operates 14 brands including Harvester, Toby Carvery, All Bar One, and Miller & Carter, saw its like-for-like sales increase by 3.4% over the past three months, bringing its total sales for the year to a 7.3% rise.

With 50,000 employees across its 1,800 pubs, bars and restaurants, M&B is expecting £55m of net cost headwinds this financial year, after being hit by increases in labour costs with the rise in the statutory National Living Wage.

However the pub and restaurant giant says there’s been a deflation in energy costs that mitigates the rise.

Slowing food cost inflation and strong cost control at site level are boosting an already robust sales performance, allowing the company to rebuild margins.

It has completed 139 conversions and remodels and opened six new sites in addition to a number of initiatives to reduce energy usage, such as solar panels and sensors.

Phil Urban, Chief Executive, commented: “We are pleased with the continued strong trading performance, which has remained ahead of the market through the year. As inflationary pressures have eased the level of price increase we have taken has reduced, leading to headline sales growth in line with more normalised levels as expected during the second half. The combination of easing inflationary costs and continued sales growth will ultimately benefit our profit levels for the year.

“Our focus remains on the effective execution of our Ignite programme of initiatives and our successful capital investment programme, driving cost efficiencies and increased sales. With the unique strengths of our business, including a diverse portfolio of established brands, value proposition and enviable estate locations, we are well positioned to continue to grow profitability and market share into next year.”