Caution urged over Mitchell & Butler results
Mitchells & Butler published their latest Annual report today. The company has reported substantial growth especially in its food sales. But the outlook for food in the managed pub sector is not all rosy.
While Mitchells & Butlers has reported a growth in revenue of 5.5% and a growth in operating profit of 5.7%, the pub industry should not take this as an indication of what the sector as a whole can expect in the wake of the coming smoking ban in pubs in England and Wales, according to our latest research.
Our view is that Mitchells & Butler’s figures flatter the pub sector because of the size of the company. Big players like Mitchells & Butler get economies of scale in areas such as marketing, recruitment, staff training and particularly in food purchasing. Our growth prediction for food sales in the pub industry in the next two years remains at 3.6%.
We would add a further note of caution since some wet-led pubs will see a fall in profits and those with a good food business who assume food business will grow strongly after the smoking ban are ignoring the fact that the customer base will only grow slowly and there will be a greatly increased number of pubs chasing the food business.
