Food sales drive Mitchells and Butler

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LONDON (ShareCast) - Mitchells & Butlers (LSE: MAB.L - news) , the UK's largest operator of managed restaurants and pub, said revenues and profits were up in the last year driven by its focus on food.

However, the firm noted it had made a slow start to the new financial year, partly because of unseasonably warm weather in the same period in 2011.

The owner of brands such as All Bar One, O'Neill's and Toby Carvery also warned of inflation, tax and other economic pressures going forward.

Full year revenue was up 3.3% to £1.86bn, while pre-tax profits were up 3.8% to £162m. (Both figures were adjusted to compare accurately to 2011, which was one week shorter.)

Like-for-like sales growth was up 2.1%, with food sales leading the way with growth of 2.9%, although this slowed on 2011, when sales were up 4.8% on the previous year.

Food now makes up 50% of sales in the company's retained estate, with sales boosted by what the company called 'key events' in 2012 as guests prioritise special occasions.

The brands in the middle to upper end of the firm's spectrum of spend per head drove this food revenue growth.

Like-for-like drink sales were up just 1.4%, although this was stronger than the previous year's 1% figure.

The business said this was partly a result of increases in alcohol duty, which had led to higher drink prices across the industry.

Like-for-like sales in the first week of the new financial year were down as a result of unseasonably warm weather last year, Mitchells said.

Since then, sales had increased but like-for-like numbers were down 0.1% in the first eight weeks of the new year, with drink taking a particular hit, down 1.9%.

Food was holding up better, with sales rising 1.5%.

The company added that further inflationary and regulatory cost pressures would impact the business in the new financial year.

It noted ongoing alcohol duty increases, further food price inflation and other cost increases, coupled with continued tightness in consumer incomes.