Pub chain Mitchells sustained by food demand

Jul 25 2008 LDP Business

HARVESTER owner Mitchells & Butlers today said it had grown market share as more customers opted for cheaper pub meals in the economic downturn.

Like-for-like sales were up 1.1% in the 10 weeks to July 19, with food outlet sales on a same-outlet basis ahead by 5.1% on a year earlier. Around two-thirds of the company’s total sales are now generated by a food-driven visits, with beer accounting for a quarter of revenues.

Mitchells said its value formats such as Pub & Carvery, where the average main meal price is £3.96, produced “particularly powerful” performances. There was also strong growth at its Vintage Inns and Premium Country Dining formats.

The company, which also runs pub chains All Bar One and O’Neills, said the decline in drink sales had been limited to 0.2% in the ten-week period.

The owner of 2,000 pubs said it had achieved “significant market share gains” during the period. It has around 3% of the pubs in the UK, with 10% of industry sales and average weekly sales per pub that it claims are more than three times greater than the average UK pub.

It added in a trading update today: “Our leadership position in value for money eating out, serving over 110 million meals a year, is enabling us to benefit from the increasing customer focus on value.

“This strategy will place us in a resilient position should general economic pressures increase.”

The company said it was taking steps to offset increasing cost pressures, but warned higher food and energy prices were likely to intensify next year.

Meanwhile, Mitchells & Butlers said it continued to work on plans to switch to tax-efficient REIT status.

The move will see the company spin off its property assets into a separate business. Real Estate Investment Trusts enable firms to unlock potential value and increase dividend payouts to shareholders