M&B to double number of key retail outlets

Managed pub group Mitchells & Butlers (M&B) plans to double the number of its key retail outlets it operates to around 1,900 sites as part of a focus on food-led businesses.

Faced with a declining on-trade drinks market, particularly in beer, earlier this year M&B identified six 'active' retail brands which it wanted to focus on, including Harvester, Sizzling Pub Company and Toby.

It also said it would identify specific areas, such as leisure ands retail parks, to expand into.

M&B said its recent trading performance has led it to believe it can grow these businesses significantly in number, while it said it would "selectively expand" its other businesses, which include All Bar One, Nicholson's and O'Neills.

"Our overall objective is to own and operate brands which have the potential to build to at least 100 pubs or deliver an earnings before interest and tax figure of more than £10m with an acceptable return on investment.

"This will enhance the focus of the business and enable better cost efficiencies," the group said.

M&B said it planned to increase its capital investment by between £20m and £25m, meaning £160m would be ploughed into the business over the course of the year.

Announcing first half profits up 55.3 per cent on turnover 1.3 per cent higher, M&B said like-for-like food sales were up by more than four per cent across its 2,000-plus estate.

Improved menus and advertising around certain retail brands helped drive market share upwards, while a cost-cutting programme had boosted margins, it added.In the first 33 weeks of the year drink sales rose 0.3 per cent.

Cost savings for the year would be in the region of £25m, £5m higher than previously stated.

M&B said its improved performance backed its strategy of focusing on food-led operations.

The group said it would review its current policy of not paying a dividend at the end of the year. In the meantime it would continue to use cash to pay down debt.

Results at a glance

Turnover: £1,037m (up 1.3 per cent)

EBITDA: £225m (up 7.7 per cent)

Operating profits: £156m (up 12.2 per cent)

Pre-tax profits: £73m (up 55.3 per cent)

Earnings per share: 12p