Evolving with the market

As Mitchells & Butlers' (M&B) chief executive Tim Clarke is no doubt heartily sick of being reminded, the recent 'credit crunch' has played havoc with his group's corporate financing plans.

A credit crunch of another kind, meanwhile, appears to be affecting some of M&B's core customers. In September, the managed pub group acknowledged that while overall like-for-like food sales had risen 5.3 per cent in the 50 weeks to September 15, "pressure on mid-market consumers [was] continuing to lead to some slowing" in its pub restaurants. Strong signs of a contracting economy? Perhaps.

Either way, the man who must ensure M&B responds effectively to this situation is Adam Fowle.

A veteran of the group since 1985 - broken only by a two-year stint at Sainsbury's in 2003 - Fowle has been charged with developing M&B's restaurant business following the recent retirement of Tony Hughes, the group's innovative food boss.

Punters under pressure

Conceding that the middle 'band' of M&B's customer base may be feeling the pinch, Fowle is confident the pub group can continue to offer quality and value-for-money experiences to draw in those pressurised punters.

"Yes, we are seeing a softening of the middle market," he says, "while our blue collar and top-end markets are doing OK. "But we can adapt to market conditions. Our carvery business is aimed at traditional customers who expect value. And things like Early Bird offers in our revamped Harvester sites can help both the customer's wallet and our top line."

Originally recalled to M&B by Clarke in 2005 to upgrade the group's retail systems, Fowle believes that the dynamics of the industry have changed fundamentally, as indeed have the customers' needs and wants.

"We say some of our outlets are now a 4,500 meals a week carvery, rather than a 2,000 barrels a year pub," he says.But food revenue doesn't come at the cost of drink sales, he adds: "Drinks are still vital and there's good money to be made in them."

A good value quality food offer can drive drink sales, he believes. "The informality of drink sales, being able to stand about in what is still a pub, is crucial," he adds.Which begs questions about the smoking ban.

Famous for trialling prototype bar concepts across the UK, M&B tried out non-smoking pubs well before the ban came into force, with mixed results. However, the level playing field that now exists across the UK means it believes it can battle on with its impressive array of brands.

"There's little we've seen in England that we haven't already experienced in Scotland. And in Scotland we're where we were before the ban started there," Fowle says. The ban will simply serve to accelerate a sales mix change, he adds.

Slow to react?

Accelerating is not something M&B does naturally, with critics arguing the group is sloth-like in its response to change. Fowle, naturally, see things differently: "We're not slow to react. This is a business that takes time to develop, and change, whether it's a bar brand roll-out or a beer on the bar, needs to be looked into.

"We need to be sure of where we're going with a project before we roll out 100, 200, or even 500 sites. We don't put a brand in all at once. We do things for the long term, rather than creating something in order to sell it off."

One such long-term project continues to be the conversion of the 239 pub restaurants M&B bought from Whitbread last year for £497m.

So far, 163 sites have been turned into M&B formats, including Hart's Boatyard in Surbiton, Surrey, which after a £600,000 revamp is now doing £30,000 a week, a significant uplift on its former guise.

Evolving the group's existing formats is also key, Fowle says, such as the Vintage Inns brand, many of whose sites have been given a makeover, while the aforementioned Harvester has been re-labelled Harvester Bar & Grill to broaden its appeal.

Other key concepts, such as All Bar One, have also evolved over the years, with established menus enlivened by new items such as tapas.

Meanwhile, committed as he is to growing M&B's food business, Fowle wants the group to remain true to its pub roots. "There's a long way to go in the UK eating out market before we get to where the US currently is," he points out. "This is about evolution, not revolution."