Mitchells & Butlers has seen a return to like-for-like sales growth following a “challenging” year to 24 September.

Chief executive Phil Urban warned that significant headwinds lie ahead in 2017 but said the company was focussed on gaining further exposure to premium market spaces and driving innovation through the creation of new formats such as Chicken Society.

Urban said that after a successful trial with Deliveroo across 25 All Bar One and Browns sites, food delivery was being rolled out across brands, in different locations and with different third party providers. He said ultimately he believed the model could apply to around a quarter of the estate.

He said acquisitions and disposals would continue to be part of the normal course of business for M&B, following its announcement earlier this month that it was putting 75 sites on the market.

He said Miller & Carter remained a key growth brand and the intention remains to grow the estate to 100 sites by 2018. Over the last year, it has grown from 36 to 52 sites. A small number of these have been acquisitions, with the majority being existing site conversions, including a number from the Harvester estate, delivering EBITDA returns of more than 40%. Urban said M&B’s portfolio gave it a strong pipeline of future conversion opportunities to continue successfully growing the brand.

He said the reinvented Pizza & Carvery business, now known as Stonehouse, had been successful – with 36 sites under the new brand at year end. He said it remained a strong value format, but with a more premium offer than prior to conversion. As with Miller & Carter, these are largely existing site conversions, and are generating returns of around 25%. He said he aims to grow Stonehouse to around 80 sites by 2018.

He said there had been good returns from the Feel Good Dining remodelling scheme in Harvester, which sees M&B spend around £400,000 of capex per site, and is delivering a return of around 25% in the 32 sites in which it has so far been implemented. He said there was a pipeline of Harvester sites to continue the rollout of this format.

On new innovations, the group said: “We have stated that we will look to carry out new concept and product development, to maintain the appeal of our existing brands and innovate in new markets. As noted previously, we have launched the new Stonehouse brand, a successful innovation to evolve and transform the Crown Carveries brand. We are also on the point of launching a casual dining rotisserie-style concept aimed at the millennials market under the brand of ‘Chicken Society’. This provides us with an opportunity to test a new concept which may be later rolled out to further sites. We expect to take the learnings from this and to develop a pipeline of further new concepts this financial year.”

In its update to the market this morning, the group revealed full year like-for-like sales down 0.8% but highlighted an “improving trend through the year”.

Sales in the first half of the year fell 1.6% on a like-for-like basis but grew 0.2% in the second half, in part driven by an increased level of capital investment in its estate but also an improvement in the performance of its sites that have not seen recent investment. In the first eight weeks of the current year like-for-like sales were 0.5%.

Across the year, like-for-like food volumes fell by 5.7%, with food spend per head up 4.6%. Drink sales reflected average spend per head growth of 4.1% offset by like-for-like volume decline of 4%.

Total revenue for the year fell from £2.101bn in 2015 to £2.086bn, with operating profit down from £270m to £231m and profit before tax of £94m compared to £126m last year.

Capital expenditure across the year was £167m (FY 2015 £162m), including eight new site openings and 252 conversions and remodels.

M&B has continued to innovate in technology, with five new apps developed over the year, with more than 400,000 downloads. The company said it was looking to build on this through the addition of loyalty incentives into forthcoming apps for Browns and Miller & Carter. It has increased its social media presence, consolidated 10m guests’ details on its central database and gift card sales have increased by more than 40%.

In terms of outlook, the company said: “Although we are working hard to take mitigating action where possible, we expect to see downward pressure on margins in this financial year, as our sector incurs the additional cost headwinds including the first full year of the National Living Wage, indications of two potential increases in the National Minimum Wage, the impact of exchange rate movements on foreign currency denominated purchases, and the recent business rates review.

“Despite these challenges, we remain encouraged by the progress we have seen so far, in particular the strengthening of our performance against the market. We will continue focusing on our three priorities, and believe that by doing so we can continue to generate long-term shareholder value.”