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- M&B says slowing energy and food inflation has offset wage increases
Mitchells & Butlers’ city centre hospitality business revenues were hit by disruptions related to the riots in England and Northern Ireland in August.
The owner of All Bar One told investors on Thursday that summer unrest had combined with “abnormally cold and wet” weather to cause a slowdown in sales during the final three months of its financial year.
The group, which also owns Harvester and Toby Carvery, saw revenue growth slow to 2.5 per cent over the period, maintaining growth slowdowns of 7.7 per cent, 6.1 per cent and 3.4 per cent in quarters one, two and three respectively.
All Bar One owner’s downtown locations suffered disruptions related to August riots
But the pub group said it remains ahead of the market, with sales growth of 5.2 per cent so far this year, and now expects full-year results to be at the top end of consensus forecasts.
Net costs have also fallen to £55m this year despite a marked rise in labour costs, which have been “substantially mitigated by deflation in our energy costs… slowing food cost inflation and strong cost control at site level”.
Phil Urban, chief executive, said: “We enter the new financial year armed with a fresh wave of initiatives under our Ignite programme and a comprehensive capital investment programme planned to deliver cost efficiencies, increased sales and further drive market-beating performance and increased profitability.”
Mitchells & Butlers shares rose 3.5 percent to 307.5 pence in late morning trading.
Adam Vettese, market analyst at eToro, said: ‘While growth has slowed, it is relative to the sector as a whole, and it appears the company has a firm grip on costs, while declining inflation is also helping with this.
‘Investors are hoping this will help stocks rise further this year and add to the 10 percent they have gained so far.
They would need to gain around 50 percent to reach their pre-Covid-19 highs.”
Mitchells & Butlers also told shareholders it is continuing to invest in its estate, with 185 conversions and refurbishments so far this year and six new sites opened.
“(This) adds to the continued rollout of a number of initiatives to reduce energy consumption, such as solar panels and sensors,” he added.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: ‘The group has consistently outperformed the market and is keeping its sights on target, continuing to prioritise equity investment when it comes to cash usage.
‘With 50 pubs a month closing in the first half of 2024 in England and Wales, strong operators such as Mitchells & Butlers are well positioned to continue to grab market share.’
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