M&B FY like-for-like sales up 9.1%: Mitchells & Butlers (M&B), the All Bar One, Toby Carvery and Harvester owner, has reported a 9.1% increase in like-for-like sales for the 53 weeks ended 30 September 2023, with growth all brands, supported by volume growth in both food and drink. Total revenue for the period was £2.503bn (FY 2022: £2.208bn), with operating profit of £98m (FY 2022 £124m), and a pre-tax loss of £13m (FY 2022 £8m). The company said that adjusted operating profit increased by 17.6% (52-weeks, net of government support), while cost headwinds were starting to abate. Like-for-like sales for the period increased by 9.1%, comprising an increase in like-for-like food sales of 8.6% and an increase in like-for-like drink sales of 9.9%. Excluding the impact of reduced rates of VAT in the first half of FY 2022, like-for-like sales growth across the period was 11.3%. Since the period end, the company said it was further encouraged by like-for-like sales growth of 7.2%. The company said: “Total sales across the period were £2.503bn with year-on-year growth driven by strong like-for-like sales performance across all of our brands. Operating profit of £98m was £26m lower than the prior year, impacted both by property portfolio valuation movements classified in separately disclosed items and the inclusion last year of an additional £52m of non-recurring government support (in the form of reduced VAT and grants). Overall, we are very pleased with our 52-week adjusted operating profit result of £221m, before separately disclosed items, which reflects a strong performance in the face of considerable cost headwinds and a record like-for-like sales outperformance against the market, as measured by the CGA Business Tracker, of 2.7ppts. We made a good start to the financial year with like-for-like sales growth of 6.5% over the first ten weeks, primarily driven by drink sales. Growth then increased further in the final five weeks of the first quarter due principally to last year being impacted by the emergence of the Omicron variant which resulted in a downturn in activity across much of the festive season. Like-for-like sales for the quarter were up 10.4% against FY 2022. Sales remained resilient through the second quarter with strong performances on key trading dates and from our drink-led, city centre pubs, especially in London, that benefitted from a further return to office working and recovery in tourism. Across the quarter, we recorded like-for-like sales growth of 6.4%, comprising drink sales growth of 9.9% and food sales growth of 5.2%. Through the second half, sales performance remained strong and our outperformance of the market extended further. Despite a wetter and cooler summer than the prior year, like-for-like sales grew by 9.7% through the second half, with all brands in like-for-like sales growth and supported by sustained growth in both food and drink volumes. The uncertainty and cost challenges the industry has faced have had an unavoidable impact on market supply with a 3.6% net decline in pubs and restaurants in the year to October 2023 and a 13.2% net decline since the start of the covid-19 pandemic in March 2020 (CGA October Hospitality Market Monitor 2023). Independent and tenanted businesses have made up the substantial majority of the net closures. Given our strong estate and portfolio of brands, we believe that we are well placed to continue to benefit from these changes in the competitive landscape.” In June, M&B completed the acquisition of the remaining 60% stake in 3Sixty Restaurants, owners of Ego Restaurants, having acquired the initial 40% stake in August 2018. It currently has 29 sites, including 16 that are leased from M&B, and circa 1,000 employees. M&B currently foresees scope for circa 20-30 conversions using the Ego format over the next three to five years. It said: “This type of acquisition, of a brand which provides a conversion opportunity which complements our brand portfolio, allows us to generate value through cost synergies of circa £3m as well as incremental profit on conversion.” The company said that cost headwinds presented a significant challenge in FY 2023 but “we are seeing clear evidence that these are starting to abate”. It said: “We now know that the National Living Wage will increase by 9.8%, and be extended to everyone over 21, from April next year, but a reduction in energy prices and slowing food inflation, in particular, mean that anticipated overall cost headwinds for the year ahead are expected to reduce to circa£65m. This should allow us to start to rebuild margins back towards pre-pandemic levels.” Phil Urban, chief executive of M&B, said: “We are delighted by the continued strength of our trading performance, and resilience in the face of unprecedented cost headwinds. We have achieved good growth in underlying profit, excluding government support, with like-for-like sales growth across all of our brands, and record outperformance against the market. Whilst we remain mindful of the pressures that the UK consumer is facing, the strength of our sales growth alongside an abating cost environment gives us confidence for the financial year ahead. We will remain focused on our strategic priorities delivered through our Ignite and capital programmes, which combined with our diverse portfolio of well-known brands, strong estate locations and talented people, leave us well positioned to rebuild margins back towards pre-pandemic levels.”