Mitchells & Butlers reports year-end sales and profits growth

By Noli Dinkovski

- Last updated on GMT

Related tags: Cent, Marketing, Macroeconomics

M&B: Like-for-like sales for the managed pub and restaurant operator were up 0.4 per cent
M&B: Like-for-like sales for the managed pub and restaurant operator were up 0.4 per cent
Mitchells & Butlers (M&B) claimed to be on track with its business transformation programme after reporting sales and profit growth in its annual financial results.

Like-for-like sales for the managed pub and restaurant operator grew from 0.4 per cent for the year to 28 September, while pre-tax profit was up from £82m to £150m.

Total revenue stands at £1,895m, a 2.2 per cent increase on 2012, while adjusted operating profit rose 5.1 per cent, to £312m.

M&B also reported a strong operational performance, with operating margin up 0.5 percentage points to 16.5 per cent. With new tills and payment systems in full roll out, the company said good progress was being made in its four key priority areas – people, practices, guests and profits.

Chief executive Alistair Darby said the company had worked hard this year to deliver its transformation plan and position M&B for future growth.

He said: “We are proud that, through the measures we have taken, we have been able to grow sales and build our margins in a challenging and competitive consumer environment, leading to earnings per share growth of 17 per cent.

“I am confident that our continued emphasis on developing our people, focusing on our brands and delivering great service for our guests will result in a better business and produce sustainable value for shareholders in the future.”

Business transformation

M&B reported improvements in each of its four transformation programme areas:

People – Staff turnover decreased from 82 per cent in 2012 to 78 per cent in 2013. The company said further reductions in staff turnover remain a key focus.

Practices – M&B said it had ‘broadly maintained’ level employment costs as a percentage of sales, at 25.4 per cent, while improving service – especially at peak times. Food inflation has been kept to below 1 per cent over the year compared to market inflation of approximately 5 per cent.

Guests – The net promoter score across the business has increased by 4 percentage points to 59 per cent. All M&B restaurants and pubs now have access to a live dashboard, which allows them to see how they are scoring against the most critical measures that drive guests to revisit and recommend their business to their friends.

Profits – Adjusted earnings per share were up 17 per cent, based on higher sales, improved operating margins and lower interest charges.

Market review

M&B picked out five key market trends, in what it claimed was a ‘challenging consumer environment’:

  • The market is large but fragmented. The eating and drinking out market is worth £75bn a year and M&B said the opportunity for scale operators to grow by taking market share with leading brands is significant in a market of this size.

  • The importance of brands is increasing. Although the majority of the industry is unbranded, the branded restaurant and pub sector has consistently grown at a faster rate than the unbranded sector, and this has accelerated in the downturn. M&B expects this trend to continue.

  • Leisure spending has been protected. Through the downturn, families have tended to protect low ticket leisure spending. Average weekly family spending on leisure increased 4 per cent from 2007 to 2011, whereas overall weekly family expenditure was down 6 per cent over the same time. 

  • Food remains the primary long-term route to sustainable growth in this sector. M&B benefits from being principally focused on eating-out, with around three-quarters of overall turnover generated from guests eating in its restaurants and pubs. The company expects the eating-out market to grow at least in line with overall consumer spending in future.

  • There are significant economic disparities by region and by economic grouping. Between 2006 and 2012, London, the east and the south-east achieved substantially higher economic growth than the rest of the country and this trend is forecast to continue. Almost half of M&B’s revenues are generated in these areas.

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1 comment

Staff turnover

Posted by Neil,

Mr Darby, if you don't treat your senior staff better and let them use their skills I don't believe your have any chance of reducing staff turnover. I don't think that your current staff turnover is anything to crow about

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