food strategy pays off for Mitchells
Sep 23 2010 By Jamie Grierson
HARVESTER and All Bar One group Mitchells & Butlers revealed a pick-up in trading today as diners returned to its outlets following the World Cup.
M&B, which also owns Toby Carvery, saw a 3.6% rise in like-for-like sales in the nine weeks to September 18, up from 1.2% in the nine weeks to July 17.
The group, which is rolling out a strategy to focus on food sales, saw a slowdown in sales during the World Cup as football fans turned to drinks-led pubs to watch matches.
But today’s trading update showed its decision to reshape its business and concentrate on food brands was paying off as customers returned after the football tournament, which finished on July 11, and boosted food sales by 7%.
M&B, which announced on Friday that it had bought bought 22 Ha Ha Bar & Grill sites for £19.5 million under its new plans, added that like-for-like sales had risen 2% in the 51 weeks to September 18.
The Ha Ha acquisition was funded by some of the £500 million proceeds from the sale of 300 drink-led sites and the offloading of the Hollywood Bowl ten-pin bowling business to AMF Bowling for £39 million.
Food-led pubs are an attractive area for the entire industry after the smoking ban, alcohol duty increases and the recession impacted the drinking market. M&B now has an estate comprising 1,580 restaurants and food-led pubs.
The group said it was planning to invest roughly £200 million next year on single site and small acquisitions as well as conversions.
M&B said it was confident over future prospects after delivering a resilient performance in a "subdued consumer environment".
Adam Fowle, chief executive, said: "This is a very encouraging performance, particularly given the present consumer economy, and underlines the strength of the Mitchells & Butlers business.
"I am pleased at the speed of delivery on our strategic plan."
M&B is buying the Ha Ha chain from Bay Restaurant Group, but will not keep the brand under plans to convert the sites into All Bar One, Browns restaurants and other existing brands.
The group revealed its strategy overhaul in March, and said it planned to focus investment on six mid-market eateries, including Harvester, Toby Carvery, Crown Carveries and Sizzling Pub Co.
Hugh-Guy Lorriman, a leisure analyst at Seymour Pierce stockbrokers, said the update confirmed a "year of strong trading" but added that the company was still viewed as a high-risk stock.
M&B, which serves 125 million meals and 450 million drinks each year, will release its full-year results on November 23.