Mitchells & Butlers, one of the largest pub and restaurant groups in Britain, has reported that it is starting to weather the challenge of costs inflation facing hospitality businesses. The group, which operates under the outlets All Bar One, Browns, Ember Inns, Harvester, Miller & Carter, Nicholson’s, Sizzling Pubs, Toby Carvery, and O’Neill’s, has 1,600 outlets and is part-owned by Irish investors JP McManus and John Magnier.
Reflecting the rise in costs, pre-tax profits for the six months through to early April fell to £40m (€46m) from £57m a year earlier, as revenues rose to £1.28bn from almost £1.16bn in the same period. Despite this, shares in Mitchells & Butlers ended 3% higher in the session, and have climbed 46% since the start of the year. The company is valued at £1.16bn.
Managing inflationary costs remains a challenge, but the outlook is improving, according to chief executive Phil Urban. He said, “The trading environment for the hospitality sector remains challenging with inflationary costs putting pressure both on the industry’s margins and disposable income of our guests. However, we are encouraged by the resilience of trade to date, including the most recent six weeks”.
The results from Mitchells & Butlers complete a mixed bag for the British pub industry. Rival Marston’s also posted earnings that showed how the British hospitality businesses were coping with inflationary costs. Meanwhile, shares in Wetherspoon rose last week after it reported that trade at its British and Irish pubs, although recovering, was nonetheless short of the boom conditions that some had anticipated following the lifting of the pandemic restrictions.
Mr McManus and Mr Magnier own over 20% of Mitchells & Butlers, which is listed on the London stock exchange. Despite the challenges facing the hospitality sector, the outlook is positive, and trade in recent weeks has picked up significantly.