Premiumisation key for M&B in wake of cost pressures

Claire Dodd

Claire Dodd

17 May 2017

Mitchells & Butlers says it is focusing on the premiumisation of its estate alongside cost cutting in order to maintain its margins against a flurry of increased costs.

Announcing its results for the 28 weeks ended 8 April 2017, it said though like-for-like sales had 'momentum', its ongoing focus was on 'mitigating inflationary cost headwinds'.

Like-for-like sales were up 1.6% at the half year and up 1.9% in first 33 weeks of year. Total revenue was £1,123m, a slight increase from the same period in 2016, of £1,096m. However, operating profit is down £12m to £145m, while profit before tax has also fallen from £83m to £75m. The company operates around 1,800 largely freehold sites.

'During the half year we have generated sustained sales growth, whilst consistently out-performing the market,' Phil Urban, chief executive, said. 'This comes from the good progress we have made in our three priority areas: building a more balanced business; instilling a more commercial culture; and driving an innovation agenda.'

He said margins had been adversely impacted by increased costs, most notably from wage inflation, property costs and exchange rate movements. 'In order to partially mitigate these costs, we have been working hard to encourage our guests to trade up and increase spend per head for a more premium experience whilst challenging our general managers to run their businesses as cost effectively as possible,' he added. 'In a challenging cost and consumer environment we will continue to focus on our three priority areas.'

The company also said it had completed 178 remodels and conversions with a focus on the premiumisation of the estate. This included conversions to its specialist steak brand, Miller & Carter, which is being seen as a main growth focus for the company. There are currently 67 sites, with plans to reach 100 by the end of 2017. Stonehouse Pizza & Carvery now has 72 sites, and the Harvester Feel Good Dining concept, is now in 55 sites.

 

 


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