Mitchells & Butlers (M&B) has this morning reported a 1.6% increase in H1 like-for-like sales, with food sales up by 1.8% and drink sales by 1.4%.
Total revenues for the 28 weeks to 14 April stood at £1.13bn up 0.6% on the same period last year, with growth in like-for-like sales partially offset by the impact of disposals made in the previous financial year. Operating profit during the half year stood at £137m (H1 2017 £145m), whilst pre-tax profit was £69m (H1 2017 £75m).
The c1,700-strong company said that growth was positively impacted by the timing of Easter which fell in the second half of last year. The company reported like-for-like sales growth of 5.8% over the Easter weekend, which moves into the first half. However, trade was negatively impacted by adverse weather which impacted sales growth by an estimated £12m in the period as a whole. Adjusting for this impact, like-for-like sales would have increased by 2.5%.
Volumes of food and drink fell 3.6% and 2.3% respectively with average spend per item on food up 5.7%, and average drink spend up 3.8%, which the company said both reflected the impact of the increasing premiumisation of the estate.
Like-for-like sales for the 32 weeks to 12 May, which are not impacted by the timing of Easter, were up by 1.4%.
During the period the company continued to increase return generating capital expenditure through remodelling or converting 220 sites (H1 2017: 172 sites) and opening four new sites (H1 2017: six sites). Conversions and acquisitions were primarily focused on premiumisation, with conversions to Miller & Carter and Stonehouse and acquisitions of All Bar One (2) and Miller & Carter (2) sites.
It said that the EBITDA return on all freehold and leasehold conversion and acquisition capital invested since the start of the previous financial year was in excess of 19% and returns on remodel projects were over 20%.
The company said: “The quantity of projects completed means that we are now within our targeted 6-7 year investment cycle, and we are reaching the tipping point in terms of reducing the proportion of the estate which has not been invested in for 7 years or more.”
Total maintenance and infrastructure capex of £29m was £5m higher than last year, with £3m of the additional spend in relation to investment in technology and systems.
The company said that although delivery remains a relatively small part of what it does, it is working with Deliveroo and JustEat to expand its presence within this growing market with 109 sites now live. Recent trials with JustEat have also enabled the group to explore the potential of click and collect, which it said presented an opportunity to participate directly in this market through take-away.
It also announced it would be trialling wireless charging across a selection of its All Bar One sites, with the facility being made available to guests who have downloaded the brand app.
In addition, it has been trialling a mobile order facility in three sites in O’Neill’s, which allows guests to both order and pay for food and drinks from their mobile device within site, without approaching the bar. It said that early evidence suggests that guests appreciate the ease with which orders can be placed with this facility allowing the sites to be more efficient during busy times.
M&B said it had seen improved customer satisfaction over the period, with its net promoter score up 5 points. Its digital penetration also increased; up to 120k online bookings per week (H1 2017 80k).
It said that both of its fledgling concepts Chicken Society and Son of Steak, were generating “very positive customer feedback”. The company said: “These concepts remain in incubation whilst we refine the offers and we are pleased with the progress being made”.
During the period, the company also developed and launched an online portal called MABLE which employs the principles of gamification to evolve the way in which it provides training and development to staff members. The portal includes training materials which staff can access at a time and place to suit them, allows M&B to communicate individually with all staff members and also includes a social element. The platform has already attracted the Learning & Performance Institute gold award for digital transformation.
Phil Urban, chief executive, said: “During the first half we continued to deliver like-for-like sales growth against a period of growth last year. This strong performance comes from the progress we continue to make in our three priority areas: building a more balanced business; instilling a more commercial culture; and driving an innovation agenda.
“Success in this highly competitive market is dependent on a continuous stream of improvements, and that is what we are focused on delivering. We have therefore embarked upon a new wave of initiatives which are in their early stages of development, and we believe have the potential to further transform the business.
“As previously announced, margins are being adversely impacted by increased costs, most notably from wage inflation, property costs, energy and food and drink costs. In light of this, our operational teams have performed well to deliver flat underlying profitability in the period.”