M&B plan provides food for thought

Mitchells & Butlers ability to deliver on its latest food-led strategy under new chairman John Lovering has been questioned by pub industry analysts.

The plan outlined last month involved a focus on the group's core food-led brands - including Harvester, Toby Carvery, Crown Carveries and Vintage Inns - and an accelerated shift away from its wet-led units.

James Dawson, analyst at Charles Stanley Securities Research, questioned the M&B strategy - especially its ability to offload its wet-led pubs, which will be needed to free up the cash to grow its food formats.

"The wet-led sites are not flavour of the month. On the Fuller's and Greene King wish-lists are managed freehold pubs focused on food so the M&B pubs will not be attractive to the obvious buyers in the market," he said.

Although M&B did not disclose the number of pubs it expected to put up for sale, research from location specialists CACI found 70 wet-led units were likely to be unsuitable for conversion to a food format and are therefore prime candidates.

According to a City analyst, who did not wish to be named, the M&B strategy realistically centres on its ability to convert its existing pubs to the food brands. "The only way its strategy works is to convert but this will cost a lot of capital expenditure," he said.

A spokesman for M&B agreed on the importance of conversions but was unable to give any detail on financing:

"Conversions are the starting point. There will then be some disposals but we've not gone into any details yet," he said.

The analyst also questioned the group's decision to open outlets in leisure and out-of-town retail parks and the high street.

"There are not many sites available on the parks so for M&B it will not be meaningful. And entering the high street with Toby and Harvester will have Wagamama and Nando's falling over with laughter."

Anthony Alder, director of property agent AG&G, has a more positive view on the group's strategy and suggested it had a strong portfolio of pubs that would prove attractive to buyers. He also believed the number of disposals would be limited as the company's strategic review highlighted that it was putting "more emphasis on growth than on shrink".