M&B warns of tough year ahead

Mitchells & Butlers (M&B) has warned the year ahead may be even tougher due to "substantial" cost increases including duty, employment, food and energy.

In its pre-close trading statement, M&B said that while it predicted duty increases would cost it an extra £9m and employment £11m, commodity and energy input costs were proving volatile and unpredictable while consumer spending is being squeezed.

Despite the challenging environment, M&B reported there was still a demand for food in its pubs and restaurants with same outlet like-for-like food sales up 4.8% for the 51 weeks to 20 September with an 8.2% rise in the number of meals sold to 115m a year. Overall, same outlet like-for-like sales were up 0.9% and total retail sales up 0.8%.

In contrast drink sales were down 0.9% for the year to date. Food now accounts for two-thirds of all sales and beer roughly a quarter. M&B continues to focus on value with average food and drinks prices up just 0.8% over the year.

For the nine weeks to 20 September, same outlet like-for-like sales up 1.3% and same outlet food sales up 3.6%. Drinks sales returned to growth — up 0.3% — for the first time since the smoking ban.

In its residential estate, which accounts for 76% of turnover, same outlet sales were up 1.6% for the nine weeks fuelled by its value formats of Pub & Carvery (average meal price £3.92), Sizzling Pub Co (average price £4.90) and Cornerstone Community (£3.92).

There has also been an uplift in sales in its premium outlets such as Vintage Inns, Metro Professionals and Premium Country Dining pubs but a slow down in the mid-market such as Harvester.

In the High Street sector, accounting for 24% of sales, same outlet like-for-likes were up 0.1% for the nine weeks.

Average food volumes at the 204 acquired Whitbread pubs have increased by 29% and sales by an average of 20%. The operator completed its hotel swap for a further 44 Whitbread pubs last week.

M&B also backed the Fight the Hikes campaign for the Chancellor to scrap the duty escalator on alcohol. "The early reversal of the Chancellor's intention to impose further real increases in the duties would provide overdue support to the role that pubs play in their local communities," it said.