Mitchells sheds last of its low-margin pubs

MITCHELLS & Butlers has completed its exit from low-margin drinks-led venues with the sale of 333 pubs to private equity group TDR Capital.

TDR, operating through its Stonegate Pub subsidiary, will pay 373 million in cash for the estate. It includes 52 Scream bars and 71 music and late-night venues such as Flares and Reflex.

The remainder of the establishments are mainly unbranded town and residential pubs. A single All Bar One venue has also been sold, though Mitchells was keen to emphasise that the rest of the chain remained among its core portfolio of brands.

The exact locations of the pubs being sold was not revealed yesterday, though a number will certainly be north of the Border.

Mitchells announced in March that it would withdraw from drinks-led businesses to focus on the casual eating establishments, where like-for-like sales growth has been ahead of trend since 2007. This has been a more attractive market in the wake of the smoking ban and alcohol duty increases which have hampered drinking venues.

The sale - which still requires approval from shareholders - marks the end of the disposal phase of Mitchells' retrenchment strategy, which has raised a total of 500m. That includes proceeds from the sale of its Hollywood Bowl business earlier this month.

Mitchells will concentrate on transforming the remaining non-core establishments into its leading brands, which include Harvester and Toby Carvery.