McMullens Camden

McMullens Camden

McMullen’s, the family brewer and pub operator, has reported record turnover exceeding £100m for the first time, but weaker profit growth, due to increased labour costs.

Sales finished the 2023 financial year at £106.6m, growth of 14%, driven in part by price increases, but also real growth in demand.

Profit before tax was £12.2m, a 4.7% decline on 2022, with profit conversion eroded by continuing cost inflation, particular on labour.

As a result, McMullens’ ambition to return to pre-covid profit levels has been delayed, but it remains the company’s objective

The accounts noted £2.5m of profit before corporation tax, relating to the disposal of property, with the proceeds after tax to be used to help grow the business overall.

Several major investments made in central London are now trading well with significant growth at the Old Bank of England, King’s Arm’s and Horse & Guardsmen.

Elsewhere there was strong growth at the Warbler on the Wharf in Milton Keynes which has had an impressive first year of trade

The acquisition of the Fisherman in Stevenage completed during the period, while there were major refurbishments of the Salisbury Warms Hotel in Hertford and Saint & Sinner in St Albans.

Drinks sales reached £61.7m (2022: 54.4m) and food sales were £41m (2022: £34.8m).

Price increases contributed to growth, but there were also areas of real growth in underlying demand.

On a same site basis, food covers were up 4% over last year.

Despite record high team numbers, McMullen’s noted record low levels of team turnover and vacancies.

Compared to pre-Brexit and pre-covid, labour costs have risen in absolute terms over £15m (78%)

Labour as a percentage of turnover has increased by nearly 5 percentage points.

McMullen’s said it pays above National Living Wage or National Minimum Wage, but its pay ladder has tight rungs, so NLW increases ripple through business and impact profits.

The tenanted division profit contribution was up year-on-year but still behind 2019 by 4.6%.

Beer was down 4.6% in the tenanted business, due to several temporary vacancies

The John Bunyan pub was sold to tenants during the period.

Own brew beer production grew by 1.8% on 2022, drive by growth in the big London pubs - but was still 9.1% behind 2019.

Cask remains half of production, but its lower yield and the retail price of cask compared with keg remains a challenge.

There was small volume growth in more premium cask brands.

The board is recommending a dividend worth £2.4m.