Mitchells & Butlers, the pubs group behind All Bar One, Browns and scores of Scotland’s best-known watering holes, struck a sour note with investors today after reporting flat sales in recent weeks.
The group, whose other brands include Harvester, O’Neill’s and Toby Carvery, also said increases in alcohol duty, regulatory pressures and food price inflation remained a concern for business in the new year.
Results for the 52 weeks to 22 September show M&B made an adjusted profit before tax of £162 million, up from £156m a year earlier.
Like-for-like sales rose 2.1 per cent, led by food, but were “broadly flat” in the first eight weeks of its new financial year.
Shares in the firm, whose estate includes a string of popular Edinburgh bars including the Conan Doyle, Deacon Brodie’s and Sheep Heid Inn, fell by 5.7 per cent to close at 312.1p.
Shore Capital analyst Greg Johnson said: “Current trading looks mellow… with M&B continuing to underperform its peers.”
Smaller rival JD Wetherspoon reported a 7 per cent increase in first-quarter like-for-like sales earlier this month.
M&B’s non-executive chairman Bob Ivell said: “We clearly feel there will be continued pressure on food costs.
“Last year [those costs] were particularly high, if you look at things like red meat, particularly in the first half.”
The group admitted that overall food meal sales volumes in its pubs were slightly lower than the previous year.
But it noted that sales had been significantly up for “key” events, including Easter and the Queen’s Diamond Jubilee, as people went for the higher priced menus to celebrate special occasions.
It said investments in customer service, including a new training academy, should help it to grow further next year depsite the tough consumer backdrop.
New chief executive Alistair Darby, who was appointed in October ending the company’s 18-month stint without a permanent boss, said he believed the firm had the “right strategy in place” to grow.
“I am delighted to be leading a company with great people and popular branded pubs, bars and restaurants,” he said. “M&B is well positioned to take maximum advantage of our evolving industry.”
Douglas Jack, an analyst at Numis, was upbeat, saying: “We believe the initial roll out of the ‘Ways of Working’ service culture has already started to benefit like-for-like sales.”
“The main brands have evolved their menus and product range, developed improved design formats and launched new marketing campaigns.”
M&B said it was “mindful of the attraction of the resumption of dividend payments” and would continue to monitor its cash flow generation before taking a decision later in the new year.
The firm serves some 130 million meals and 420 million drinks a year and is one of the main players within Britain’s £70 billion eating and drinking out market.
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Sunday 19 May 2013
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