M&B conversions ahead of schedule

Managed operator Mitchells & Butlers (M&B) is in line

to complete the conversion of the former Whitbread pubs it bought last summer to its own brands six months early.

The firm bought 239 Brewers Fayre and Beefeater pubs for £479m, with a view to turning them over to its own concepts in two years.

The process now looks

like being overwhelmingly complete by the end of the year - six months ahead of schedule. The company has already converted about

25% of the sites and will have 50% finished by the time of its interim results in May.

There are only 160 former Whitbread pubs trading under their original banners. By Christmas, only a few sites where planning consents have been delayed are expected to remain unconverted.

The company is also on track to remove all Beefeater branding by the end of this month, in line with the

original sale agreement with Whitbread. Chief executive Tim Clarke said: "We do expect to have the vast majority done by Christmas."

M&B revealed that sales at the remaining 160 Whitbread pubs trading pre-conversion are down 8.3% below a year ago, when they were still owned by Whitbread.

Clarke said M&B had removed unprofitable sales promotions to protect the bottom line at these sites. "There was a local of local discretion - a lot of local

discounting activity," he said.

Elsewhere in the estate, M&B saw a 4% rise in like-for-like sales in the 16 weeks to 20 January. Strongest sales growth occurred in residential areas where sales were up by 4.6%. Food sales were the biggest driver of sales growth, with a 7.2% increase compared to the year before.

In Scotland, M&B reported a 0.4% increase in overall sales, with food sales up 5% while drink sales were down 2%.

Tchenguiz urges M&B ReiT move

Iranian property magnate Robert Tchenguiz has given his clearest public indication yet that he wants Mitchells & Butlers (M&B) to convert to a real estate investment trust (Reit).

Tchenguiz, who made an abortive 550p-a-share bid for M&B last May, has built a 15% stake in the firm. A few days before M&B's annual general meeting, it was revealed that Tchenguiz had been actively buying more of the firm's shares.

The latest buying spree is being seen by many as a way of keeping pressure on M&B management to consider a Reit conversion, which could deliver upwards of £100m additional profit, on top of the £100m paper profit he is already sitting on at the company after buying about 12% of the company for less than 500p a share.

Tchenguiz told the Daily Telegraph: "I've just got an investment here. As long as they look after it, I'm happy. They're doing a great job for now. In a few months' time if they haven't done it then, we'll come and make a stance."

m&b smoking ban results

Mitchells & Butlers (M&B) has revealed a remarkably benign smoking ban outcome in Scotland where it has about 100 venues. In England and Wales, the company has 200

non-smoking pubs, and sales growth is only a percentage point or two below the rest of the estate.

M&B's Scottish pubs saw like-for-like sales 0.4% ahead of last year for the 16 weeks to 20 January. Sales have been flat in recent weeks as a result of colder winter weather. Chief executive Tim Clarke admitted that his personal view prior to the introduction of the ban in Scotland was that his estate north of the border would be trading at between 3% and 5% down at this stage. When it came to trading patterns at M&B's pubs in England and Wales, he said: "It depends on the size of the wet mix but at worst, sales are a few percentage points below (sales growth in smoking pubs)."

M&B has been banning smoking early at food-led pubs and former Whitbread sites being converted to food-led concepts.