Mitchells & Butlers pulls in the customers
Jan 30 2009 by John Cranage, Birmingham Post
Birmingham-based pubs operator Mitchells & Butlers is pulling in budget-conscious customers with meals for as little as £3.50, shareholders heard yesterday.
Despite the recession and the weakening eating-out market, M&B was able to report at its annual general meeting at the ICC that like-for-like food sales grew by almost three per cent in the first 17 weeks of its financial year.
It said it used advantages of scale to offer £3.50 main meals at its Crown Carveries and meals for £4.99 through its Harvester Earlybird offer.
The increased demand had a knock-on effect on like-for-like drinks sales, which were up 1.2 per cent in the same 17 week period to January 24.
M&B said in its AGM statement: “Against an on-trade drinks market in serious decline with UK beer volumes down 9.9 per cent in the three months to the end of December, this represents our strongest ever recorded rate of market share gain.”
M&B owns and operates about 2,000 pubs, with the majority being biased towards residential locations. Other brands include Ember Inns, Toby Carvery, All Bar One and O’Neills.
Its estate represents about three per cent of the UK total and the company has a ten per cent share of the market.
It said yesterday that its residential estate, which accounts for 76 per cent of sales, continued to perform well with like-for-like sales up 1.7 per cent in the 17 weeks to January 24.
In the high street portfolio, a strong performance in central London and town venues was offset by continued weakness in later evening venues.
Group like-for-like sales over the past nine weeks were up one per cent, helped by a strong two-week Christmas period.
With customers becoming more value conscious and price sensitive, M&B said the average price of a meal was now £6, with the average price of a pint of standard lager 40p cheaper than in leased pubs. But with increased duty levels and food cost inflation, the company said it had seen a reduction of two percentage points in its gross margin.
Chief executive Tim Clarke said an emphasis on quality, value and service was helping M&B weather the economic storm so far.
“It will be a very tough 12 months but I am confident that we can maintain our progress,” he said. “I would love to be able to say we have reached the bottom of the downturn but I am afraid that against all the general economic news it will go on being very tough at least.”
M&B also said it was making good progress with its debt reduction programme.
“We have successfully completed or contracted on a total of £52 million of pub disposals and sale and leasebacks of non-core assets in the current year, of which £20 million has been received,” Mr Clarke said.
M&B shares closed yesterday 1p up at 187.5p.
