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Tue 24th Nov 2015 - Phil Urban – M&B is facing unprecedented competition
Phil Urban – M&B is facing unprecedented competition: Phil Urban has said Mitchells & Butlers (M&B) is facing unprecedented competition as he set out the three key priorities for the company. Urban, who replaced Alistair Darby as chief executive earlier this year, said M&B needed to build a more balanced business, instil a more commercial culture and increase the pace of execution and innovation. He told analysts during a presentation of the company’s full-year results today (Tuesday, 24 November) the company had an unbalanced portfolio, was lacking a commercial edge, had been slow to innovate and there was a lack of pace in the roll-out of some of its brands. He outlined plans to reinvigorate its mid-market “cash cows” Harvester and Toby Carvery that had been hit by increased competition, converting some mid-market brands into premium ones and accelerating the roll-out of those concepts. He said: “The market has never been more competitive. There were 1,300 new net openings in the most recent year and it is like a whole new M&B. These businesses may not survive in the long-term but in the short-term they give established players a real headache. You can’t stop some of these lost sales so we have to upgrade our amenity. Two-thirds of our Harvester sites have had a competitor open in a five-kilometre radius and for one-third of those it has been a direct competitor. One example is a site in Manchester, which was taking £40,000 and then had competition from Five Guys, a Farmhouse Inns and a McDonald’s among others. It’s still taking £35,000 a week which is indicative of how strong a brand it is. It’s been a similar story for Toby. This causes a real short-term problem. The consumer is getting more demanding. They know what great value represents and what great value looks like. Mediocrity is just now not acceptable, if it ever was. Then there’s the biggest game changer – the National Living Wage. We are looking at the efficiency across all our business models. We need clearly targeted brand propositions making sure they are all deep-rooted in customer insight. This includes matching the right brand to the right place. M&B is a giant of the industry. It has some of the best real estate in the industry – most of which is freehold. We have a strong brand portfolio but we are over exposed in some market segments and under represented in others. We need to build a more balanced business and constantly evolve what we do – brands have to have real clarity. This will mean accelerated expansion in most of our successful brands. Miller & Carter, for example, has just 36 locations – accelerating the roll-out of a successful brand makes sense. Harvester and Toby are the brands that are most susceptible to the new entrants (competition) – they are there to be shot at. It has taken time to respond across the entire estate. We have to speed up the pace in which we work. There’s not just one lever to pull – there needs to be action on a number of fronts. We have to use these brands effectively to stay ahead of the market and maintain the brand standards right across the portfolio. These are the heartland brands of our business we are getting firing again. Some of our mid-market brands will be converted into premium offers so it’s the right brand for the right site. We will also look to target those customers that benefit from the National Living Wage. We need to make sure we take our share of that new business.” Urban also said M&B needed to instil a more commercial culture with a focus on profitable sales. He added: “A lot of work has been done in recent years to evolve the culture. We have an engaging culture but are lacking a commercial edge. We need a more results orientated culture. It’s really critical that every pound converts to bottom line. The most important role in our business is that of our general managers. They are responsible for driving process and recruitment. They are the ones that know first about the competition and have to react quickly. It’s them and the area managers – the rest of us are here to support these two key roles. We need our general managers to be front-of-house serving our guests day after day.” Urban also added M&B needed to increase the pace of execution and innovation. “We need to invest in digital capability,” he said. “This will involve reviewing the role of mobile technology, looking at customer offers, social media and CRM. There will be an increase in testing and trialling throughout the business. This will happen within existing brands and new product development. For example we had two new Sizzling Pizza & Carvery restaurants but have been slow to realise we have an excellent proposition and can accelerate a roll-out of the business. However, all roll-outs need to be done at a speed that doesn’t damage the DNA of the brand.” Urban also stressed there were no plans to streamline the estate. He said: “I hear people say we have too many brands – I don’t necessarily share the same view. We have the same synergy but different customer facing parts. I don’t look at the portfolio and think we have too many brands.” Chairman Bob Ivell added: “There is no doubt the marketplace is getting more competitive. Street food is growing, not just in London but other places. Companies like Pret are growing their offers. There’s the growth in coffee houses, some of which are experimenting with evening meals and even with offering liquor. Then there’s businesses like Enterprise – they’re all looking to take their market share.”


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