Mitchells & Butlers grew like-for-like sales 1.6% in the 28 weeks to 8 April, with a 1.9% increase for the first 33 weeks of the year.
Food sales during the period were up by 0.8% and drink sales by 2.3%. Volumes of both food and drink fell 4.8% and 1.8% respectively with average spend per item on food up 5.9%, and average drink spend up 4.2%, which the group said reflected the impact of the increasing premiumisation of the estate.
However, this excludes the impact of Easter, which fell in the first half of last year. Like-for-like sales for the 33 weeks to 13 May, including Easter, grew by 1.9%.
During the period the group completed 178 return generating capital projects with a focus on premiumisation of the estate.
In all, M&B completed 172 remodels and conversions (H1 2016: 164) in the first half of the year, keeping it on track to achieve its aim of a 6 to 7 year cycle of reinvesting in each of its sites. Six new sites were opened and the group expects to complete around 15 new openings in the full year, mostly in All Bar One, Alex and Miller & Carter.
M&B said its main focus for this year had been steak format Miller & Carter, which is now at 67 sites open and on track to reach around 100 sites by the end of 2017. The group said the brannd offered “possible growth opportunities even beyond the 100-site target”. It also continued its conversion of sites into the Stonehouse Pizza & Carvery format, now in 72 sites, and extended the Harvester Feel Good Dining concept, now in 55 sites.
The group said another key focus had been innovation with examples ranging from the introduction of a low calorie prosecco in a quarter of the estate and the development of vegan dishes, to exploring popup and partnership opportunities to expand the reach of our brands. Two new concepts were launched during the period: Chicken Society and Son of Steak and the group said it was encouraged by the early trading in both and “whilst we expect to open more sites in the months ahead, we will take time to assess the performance and the business model of each before deciding whether a scale rollout is appropriate”.
M&B continued to extend its use of delivery, which is now live across more than 50 sites and in three of its existing brands, plus Chicken Society and Son of Steak. The group said it demand appears strong across towns and cities nationwide. On average delivery sales are around £300 per site per week. The group said certain individual sites trade well in excess of this amount, with the two new concepts being particularly strong on delivery sales. M&B currently works only with Deliveroo but said it was close to extending the offer into other regions through alternative suppliers and believes that a delivery offer may ultimately be applicable for up to a quarter of the estate.
The group is currently in negotiations to sell 78 sites which it expects to complete before the end of the year. The annualised EBITDA of these disposals is around £5m.
Total revenue for the period was £1.1bn adjusted operating profit of £149m compared to £156m in the first half of 2016. Profit before tax was £75m (H1 2016 £83m).
Chief executive Phil Urban said: “During the half year we have generated sustained sales growth, whilst consistently out-performing the market. This comes from the good progress we have made in our three priority areas: building a more balanced business; instilling a more commercial culture; and driving an innovation agenda.
“As previously announced, margins have been adversely impacted by increased costs, most notably from wage inflation, property costs and exchange rate movements. In order to partially mitigate these costs we have been working hard to encourage our guests to trade up and increase spend per head for a more premium experience whilst challenging our General Managers to run their businesses as cost effectively as possible.
“Overall, we are pleased with the turnaround in our sales trajectory and relative performance against the market. In a challenging cost and consumer environment we will continue to focus on our three priority areas.”
