Pesto reports profit boost as turnover approaches £25m in period it was acquired by M&B, expects to continue outperforming market: Italian restaurant concept Pesto has reported turnover increased to £24,261,000 for the 66 weeks ending 29 September 2024 compared with £17,605,000 for the year previously. The company, which operates ten sites and was acquired by Mitchells & Butlers in May 2024, saw pre-tax profit in the 66 weeks rise to £2,066,000 from £385,000 the year before. In their report accompanying the accounts, the directors stated: “Sales across the 66 weeks ended 29 September 2024 have increased, driven by strong performances across the majority of sites and continued out-performance against the market as a whole, and of the managed group sector. Operating profit reflects a notable recovery in profitability built on by the strong sales performance coupled with falling cost inflation. We are pleased with our operating profit performance, which reflects resilience amid challenging conditions, particularly high inflation, the cost-of-living crisis, and fluctuating consumer confidence. On 14 May 2024, the company was acquired by Mitchells & Butlers. The directors are pleased with the significant progress made with the Pesto business throughout the financial period whilst the business has undergone a change in ownership. Over the period the company was able to improve its profitability through a combination of sales growth and the calming of cost inflation (particularly energy costs). The directors are positive about the period ahead but recognise that trading may be harder as cost pressures (notably wage costs) increase. They are, however, confident that site numbers will increase and contribute significant Ebitda. Cost headwinds will continue this financial year. Against a benign backdrop of general inflation (including food and drink inputs) by far the most significant increase is expected to be In relation to labour costs due both to increases in the statutory national living wage and in the recently announced increase in employers’ national Insurance contributions, both of which take effect from April 2025. We anticipate that energy costs this year will broadly stabilise overall with no further deflation, as has been seen in the accounting period ended September 2024. Notwithstanding recent cost increases we feel the business is in very good shape and we expect to outperform the market driving further profit growth in the year ahead.” No dividend was paid (2023: nil). The reporting period was changed to align with M&B’s financial year. Last month, M&B said it has lined up the first conversion for Pesto. M&B plans to transform the White Swan in Wythall, which borders Solihull and Birmingham, into the 11th location for Pesto, with the restaurant set to open early in the spring. At the time of the acquisition, M&B chief executive Phil Urban told Propel that he saw Pesto growing to up to 80 sites. In January, he said he was “very pleased” with its performance and added: “Pesto will do one to three sites [this year], but the real programme will start at the end of 2025.”