Mitchells & Butlers (M&B), the managed pub and casual dining group, has this morning revealed an acceleration in comparable sales growth in recent weeks.
The group, led by Adam Fowle, said that like-for-like sales had moved forward from 2.8% for the year to 25 September 2010 to 3.7% in the most recent eight weeks, driven by like-for-like food sales up 6.9%.
The performance excluded all businesses not in M&B’s “retained estate” – such as the 333 pubs sold to TDR Capital, the Hollywood Bowl business, and a clutch of Innkeeper’s Lodge sites.
M&B said that other sales lines, such as accommodation, bowling and machines, were down 2.2% on a like-for-like basis, although after the above disposals these items represented only around 3% of the sales mix.
Announcing full-year results, the Birmingham-based group reported pre-tax profit up 26.1% to £169m on sales up 1.1% to £1.96bn, although the group recorded an overall loss after a revaluation of the estate saw the overall property value lowered by £235m – the result largely of reduced valuation multiples.
Ebitda in the retained estate was £391m, with operating profits of £285m and operating margins up 1.9% to 17.0%.
M&B said that food volumes and average food spend per head both rose 2.3%, which it said was driven by upselling and a greater proportion of higher priced items being chosen, plus its national advertising campaigns for Harvester, Toby and Sizzling Pub Company. It said it had outperformed the eating-out market by 7.2% points.
M&B had seen significant cost increases stemming from rises in the National Minimum Wage, holiday pay entitlements, alcohol duty, landfill tax and business rates, plus inflationary costs on food, drinks and distribution. These were partly offset by a significant decrease in energy costs plus efficiencies in menu management, purchasing gains, reduced wastage and overhead reduction. Staff productivity increased by 2.0% in the year, however employment as a percentage of sales increased slightly to 24.5% of sales.
During the year the group spent £138m on its estate, including £28m on acquisitions and expansionary capital. Ebitda return on expansionary capital over the past two years was over 30%.
Including the £363m TDR/Stonegate transaction, which was completed after the year end, M&B has raised over £500m from disposals, including the sales of 49 individual pubs at an ebitda multiple of more than 15 times.
Net debt was £600m lower at £2bn, after taking into account proceeds from the Stonegate disposal.
Concluding M&B said: “The outlook for consumer spending remains uncertain in light of government spending cus and the VAT increase in January.
“However, the strength of M&B’s brands, the effectiveness of its marketing platform, its operational capabilities and strong capex returns underpin the Board’s confidence in the company’s prospects.”
