Uplift in its wet-led businesses, an improving recruitment landscape and solid Christmas booking levels are just some of the reasons Mitchells & Butlers (M&B) is positive about the coming months, CEO Phil Urban has said.
In analysts call following its full-year results update yesterday (7 December), Urban said that despite the challenging landscape he was pleased with the progress the business had made, “and had it not been for the eye watering increases in utility costs last year we would have all but recovered to pre-Covid levels of profit last year”.
The group finished the year with like-for-like (lfl) sales growth of +1.1% on 2019 and achieved lfl sales growth of 6.5% against FY2022 and 9.2% against FY2019 in the ten weeks since the end of the financial year on 24 September.
“Despite the macro environment we believe we are absolutely on the right path,” said Urban. “Once the macro headwinds subside, we think we will be in a very strong position.”
Tim Jones, chief financial officer, Mitchells & Butlers, added that the business was mindful of the potential impact of the cost of living crisis on guests going forward. “We don’t know what that will hold but it’s fair to say that’s not substantially evident as a risk in terms of what’s coming through our tills at the moment.”
Urban outlined four key reasons why the business is feeling confident that it can continue to build over the coming months.
One of these was the changing in behaviour of guests, which has come from society learning to live with Covid, which has resulted in its wet-led businesses starting to fair better towards the end of the year.
Nicholson’s, for example, was really struggling this time last year, he said, but finished the current year very strongly, “beating all our expectations and is now in solid growth, and arguably is probably leading the way for us”.
Urban said last year was also challenging in terms of recruitment, but that the situation had improved in general. “We achieved last year’s results despite huge people issues.”
Other factors giving it reasons to be positive included the increased “trust and love” for its brands, shown in its improved guest satisfaction scores, and the fact it is expecting a strong Christmas, with “bookings looking solid”.
He said M&B would continue to focus on its three core strategic pillars: building a more balanced business, instilling a more commercial culture, and drive an innovation agenda.
The business is planning to resume its target investment programme of every seven years.
While a particular area of focus for its capital programme has been on the trials of Browns in suburban locations – two sites are now open: in Beaconsfield and one in Ruislip (which opened last week), which have been performing very well.
He said the business was facing high commodity costs across all lines but was constantly looking for ways to limit exposure to those lines which have the highest inflation at any one time. He said lamb had been taken off the Toby Carvery menu for a period of time but was now back.
He added that M&B had taken more price than it usually does, moving prices on food and drink by c.5%, but said it had worked hard to protect entry items where it could.
“So far the guest reaction has been very good and we can’t see any deterioration in frequency but we are remaining very focused on guest sentiment and on trying to ensure service levels and the amenity makes the overall experience positive.”
In terms of initiatives, Urban said the business was continuing to push forward its delivery and click and collect offering, which together achieved more than £45m of sales last year.
It opened its first Toby Carvery dark kitchen in an O’Neills in Clapham, during the period, as well as its first competitive socialising concept called Arrowsmiths out of an O’Neills in Solihull which he said had got off to a very impressive start.
