Like-for-like sales rise at Mitchells and Butlers but costs put margins under pressure

Casual dining and bar group Mitchells and Butlers enjoyed a rise in like-for-like sales of 1.8% in 2017 but increasing costs are putting profit margins under pressure.

In an update to the City today, Mitchells and Butlers, which operates brands including All Bar One, Harvester and Orchid Pubs, said that total revenue for the 53 weeks to 30 September had risen to £2.18b (up from just under £2.1b the year before).

However, profit before tax was down to £77m, from £94m the year before.

The company blamed inflationary cost pressures for a year-on-year reduction in its operating margin, thanks to cost increases on labour, utilities, property, duty and food and drink costs. Adjusted operating margins for the full year were about 0.8 percentage points lower than last year at 14.4%.

Nonetheless, Mitchells and Butlers enjoyed a stronger performance since the end of the financial year, with like-for-like sale rising 2.3% in the last seven weeks.

The business has more than 1,750 pubs and restaurants and sold 79 restaurants over the past financial year.

Phil Urban, chief executive, said: "This year, we have continued to make progress on our three priority areas: building a more balanced business; instilling a more commercial culture; and driving an innovation agenda. This has resulted in a period of strong operational achievement for Mitchells & Butlers with a sustained return to like-for-like sales growth driving market outperformance. We have also gained agreement with the pensions trustees on future pension contributions which gives clarity to shareholders and pensioners alike.

"Cost headwinds across the industry have adversely affected margins but we continue to work hard to mitigate as much of these as possible through our focus on efficiency and profitable sales growth."

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