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Thu 2nd Jul 2020 - Mitchells & Butlers – ‘we are encouraged by results at our re-opened German business’
Mitchells & Butlers – ‘we are encouraged by results at our re-opened German business’: Mitchells & Butlers has reported its re-opened German business, Alex, provides insights and encouragement ahead of its UK re-opening this weekend. It stated: “Our German business, Alex, re-opened through mid to late May, affording us valuable insight into the challenges and opportunities ahead, and we are encouraged that sales levels have grown each week since re-opening. City centre sites have been the slowest to recover, but conversely some suburban businesses have generated days of year on year growth. From the 1st July, VAT on food in Germany will drop from 19% to 7% for a year, and on all other categories, from 19% to 16%, through the rest of the calendar year. We are therefore confident that the business will recover quickly, as the impact of covid-19 subsides.” On UK re-opening it stated: “We have had a skeleton team working throughout lockdown, including a field-based team that have maintained the businesses, responding to break-ins and emergency call outs. A structured cadence of meetings throughout the week has helped to keep everyone informed, as covid-19 policy and the industry response has developed. Mitchells & Butlers has played a full role in the UK Hospitality led forums that have helped to devise the Hospitality Sector Protocols Document that the government issued for the sector, and we continue to lobby government directly to ensure that we, and the sector, get the support we need to protect jobs once we re-open and then re-build. We are working to an early July date for English sites to re-open, with Wales and Scotland following over the next two weeks and have developed a detailed re-opening plan for the business. Each site will have clear directional and spacing signage to explain and help maintain social distancing; sanitising stations; disposable menus; table spacing; capacity management where possible through our online booking engines; a cashless-first approach (and in some businesses cashless-only); and new brand specific covid-19 safe service cycles such as vegetables being served in Toby Carvery, as opposed to the usual self-serve model. We have also worked hard to ensure that our team can both be and feel safe at work, including new protocols for deliveries, and where appropriate for take-away food collection. Key to these measures is the government guidance on the necessary distance between people, clearly a one-metre distance will allow for significantly higher capacity and will impact the extent of adaptations to service cycles required.” The company reported total revenue of £1,039m (HY 2019 £1,186m) in the 28 weeks ended 11 April 2020 and a loss before tax of £121m (HY 2019 £75m). Unsecured committed financing facilities has been extended by £100m to total £250m to 31 December 2021. Chief executive Phil Urban said: “The business was performing very well before the enforced closure in response to covid-19, building on the strengths of our estate of mainly freehold properties, our diversified and well-loved brands and our team’s industry leading operational skills. These assets, coupled with our early experience of re-opening in Germany, give us a clear plan for re-opening and ensure that we are well placed to continue to bring people and communities together and to keep Mitchells & Butlers at the forefront of the eating and drinking-out market.” On trading ahead of closedown, it stated: “Before covid-19 we had enjoyed a strong start to the year. Like-for-like sales growth of 2.6% in the first quarter had been followed by a period of softer sales due to the stormy weather, but we remained c.1% ahead of the market and continued to see the beneficial impact of our Ignite programme of work. Stronger margins, better labour control and tighter cost management had resulted in operating profit growth and we had just started to refresh the range of Ignite initiatives, such that we were confident of a strong finish to the year. We closed all our businesses immediately on the evening that lockdown was announced to protect our team and our guests. Established communication channels were set in motion to ensure that we could keep the whole team updated during what was a period of confusion and concern for everyone. In keeping with our values, we maintained an honest and open style to all communication and carefully considered our options in the light of the developing situation, including emerging details on government support. We swiftly set up a closedown team to instigate a structured approach to closing the businesses and to minimise losses. Stock loss was an immediate issue and so as to reduce the impact, perishable items were sold directly from sites or donated through our established relationship with the charity Fareshare. In total we were able to donate 11.5 tonnes of food, equivalent to 27,500 meals, to vulnerable communities which would otherwise have gone to waste. Cash floats, including those in amusement machines were banked, full stock counts were taken, and each business was physically secured for a prolonged period of closure.”


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