Mitchells & Butlers’ (M&B) chief executive Phil Urban, said he would rather trade with some restrictions for longer, rather than have stop-start trade if local lockdowns were to be imposed due to the Indian variant of Covid-19.
Speaking to MCA following the pub and restaurant operator’s half year update for the 28 weeks to 10 April 2021, he said that not only do closures mean wasted stock, but the implementing of lockdowns do very little for consumer confidence.
“I think the current news around the variant runs the risk of spooking people who are nervous, but it’s still early days,” he said. Urban added that he was still hopeful that restrictions would be relaxed by 21 June, but he had always been sceptical that the sector would have a full lift of restrictions by that date.
“The bigger issue is government support,” said Urban. “We’re expected to pay full business rates from the start of July. If we can’t trade, then we’d be expecting government support to continue.”
M&B launched an open offer in February, raising £351m, which the business said, alongside the associated package of refinanced terms for its secured and unsecured debt, provided a strong platform of financial stability.
Urban explained that the equity raise was “more to do with us being prudent” than because it was in need of that level of finance at the time. “It was very unclear how long the lockdown would last. We knew how much cash we were burning and we needed to make sure we could survive a very long lockdown,” he said.
Fortunately the worst-case scenario in terms of lockdown length didn’t materialise for Urban. “Now it actually put us in quite a strong position with a strong repaired balance sheet which means that we can get back onto the strategy we were on before, of investing in our estate on a six or seven year cycle, and in our transformation programme where we have big tech investments – we are resurrecting those.”
Strength in diversity
Urban believes that the diversity of M&B’s portfolio has been strength of the business. While some of its brands like Nicholson’s have been hit in its London locations where it relies on the custom of tourists and office workers, they’ve done better in the suburbs where people “have been displaced to”.
In terms of trends and changing consumer habits, Urban said it’s hard to know what will stick, but he thinks the accelerated uptake of technology, such as order and pay at table, will stick around and is something he believes serves all brands well. “I suspect it’s something that’s just going to be expected and used more going forwards,” he added.
Delivery is something is he also believes will maintain elevated levels, and although its growth will clearly cannabilise other meal options in some way, said Urban, he doesn’t see it as a threat. “I think it introduces more people to your brand and might make people want to experience it for real in a restaurant or pub,” he added.
One positive to come out of the pandemic is he that he feels the industry is far closer. “I’ve certainly got to know my peers in a far better way than I did before – as a sector that’s healthy.”
M&B: ‘If we can’t trade, government support must continue’
Mitchells & Butlers’ chief executive Phil Urban, said he would rather trade with some restrictions for longer, rather than have stop-start trade if local lockdowns were to be imposed due to the Indian variant of Covid-19. Speaking to MCA following the pub and restaurant operator’s half year results update yesterday, he said that not only do closures mean wasted stock, they are likely to dent consumer confidence. ”We’re expected to pay full business rates from the start of July. If we can’t trade, then we’d be expecting government support to continue,” he added.