Food sales slump during World Cup hits M&B's growth

The company, which owns about 100 pubs in Scotland including The Sheep Heid Inn and Deacon Brodie's Tavern in Edinburgh, Glasgow's famous Horseshoe Bar and the Hawes Inn in South Queensferry, said like-for-like sales rose by 1.2 per cent in the nine weeks to 17 July, down on the 1.8 per cent seen over the previous 33 weeks.

The group, which also owns the All Bar One chain and Harvester restaurants chains, said the World Cup effect stripped around 2 per cent off comparable food sales.

It was a more buoyant tournament for drinks-focused pub groups, with larger rival Enterprise Inns and JD Wetherspoon recently revealing better trading thanks to the football and good weather.

Mitchells & Butlers said that excluding the effects of the World Cup, the slowdown in food sales growth would have been less marked, at around 3.2 per cent versus 4.3 per cent in the previous 33 weeks.

Drink sales growth increased slightly, to 0.5 per cent from 0.3 per cent.

The company also said its operating margins continued to improve with third-quarter margins being slightly ahead of the same period last year.

Net debt has also reduced to 291 million excluding the 88m proceeds from its disposal programme. Mitchells & Butlers is also looking to cut costs and has increased its savings target in the current year to 25m from 20m.

The group added a cautionary note over consumer spending in the months ahead.

It said: "There continues to be uncertainty in the outlook for discretionary expenditure and associated pressure on the UK's eating and drinking out market.

"However, our core brands' effective marketing and value positioning have generated increases in sales and profitability this year and form a strong platform for future growth."

Numis Securities analysts said that excluding the World Cup impact, Mitchells & Butlers's sales trend was "encouraging against tougher comparatives, driven by ongoing investment, brand advertising and improved menus and product range".

Mitchells & Butlers is currently working on a new strategy revealed in January to become a food-led business, focusing on six core brands, including Harvester, Toby Carvery, Crown Carveries and Sizzling Pub Co.

The group, which owns and operates some 2,000 pubs across the UK, is hoping the revival plans will help boost profit margins.

As part of the shift in focus the company agreed earlier this month to sell 52 hotels to budget hotel chain Travelodge including sites in Perth, Glasgow, Motherwell and Helensburgh. Travelodge will seek to retain all 430 staff and look to recruit a further 115 positions, including 25 manager roles and 90 hotel staff.

Mitchells & Butlers is also looking to dispose of about 300 drink-focused pubs with progress expected to be announced later in the summer.

The group serves around 130 million meals and 575m drinks each year and is one of the largest operators within the UK's 70 billion eating and drinking out market.

Shares in the company closed up 1.1p at 304.8p yesterday, valuing it at about 1.2bn.