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Morning Briefing for pub, restaurant and food wervice operators

Thu 25th Nov 2021 - Mitchells & Butlers reports 2.7% increase in lfl sales
Mitchells & Butlers reports 2.7% increase in lfl sales: Mitchells & Butlers (M&B) has this morning reported a 2.7% increase in like-for-like sales for the eight weeks since the end of its financial year to 25 September 2021, against the same period in 2019. The Harvester and All Bar One operator said this comprised an increase in like-for-like food sales of 9.5% and a decrease of like-for-like drink sales of 4.8%. It said that volumes remained in decline of between 10% to 15% during the eight weeks, with sales being driven by increases in spend per head and reduced VAT on food and non-alcoholic drinks. Total sales in this period grew by 0.5%. Across the full year like-for-like sales declined by 9.6% with food sales up by 2.5%, supported by reduced levels of VAT, and drink sales down by 21.6%. Against FY 2019 drinks volumes were in decline of 28.5%, which the company said reflected the restrictions on solus drinking and the slower recovery of wet-led brands particularly in larger city centres and outside of the higher energy younger pub and bar market. Food volumes, across the year, were in decline of 25.1% with the increase in average spend per head reflecting the increasingly strong performance of premium offers. Total revenue for the year stood at £1.065bn (FY 2020 £1.475bn), with operating profit of £81m (FY 2020 £8m), and a loss before tax of £42m (FY 2020 loss of £123m). The company said that since trading resumed without restrictions on 19 July, it had seen an encouraging return to like-for-like sales growth, helped by the lower rate of VAT on food and non-alcoholic drink sales. However, it said cost headwinds present a “major challenge to the hospitality sector as a whole, most notably in utilities and employment costs”. It said: “Through accelerated and focused delivery of a new set of Ignite initiatives and tight control of the business we are working hard to mitigate these costs as far as possible, but there will inevitably be a residual impact on the current financial year’s performance. We successfully launched our Open Offer on 22 February, raising £351m. The equity raise, alongside the associated package of refinanced terms for our secured and unsecured debt, provides a strong platform of financial stability as we continue to rebuild the business after the disruption caused by the covid-19 pandemic.” At the balance sheet date, the group had cash balances on hand of £227m, with undrawn unsecured facilities of £150m. The company said: “After trading restrictions were removed, sales across the market improved and like-for-like sales growth was achieved in August and September. Performance was generally stronger in suburban locations than city centres, with consumers staying local during the pandemic and much of the workforce continuing to work from home. Footfall within major cities remained well below pre-pandemic levels making trading in city centres more challenging. However, footfall has been slowly increasing in cities and an improvement in performance has followed, a trend which is expected to continue. We believe that the desire to socialise in pubs and restaurants, and to share experiences which cannot easily be replicated at home, remains strong and that there is pent-up demand which has built during closure.” Phil Urban, chief executive of M&B, said: “Despite the inevitable challenges faced by our business over the past year we are now well positioned to regain the momentum previously built as we come out of the pandemic. The trading environment remains challenging and cost headwinds continue to put pressure on the sector. However, we have strengthened our balance sheet and returned to profitability and cash generation, allowing us to resume our capital plan and Ignite programme which will deliver sales and efficiency improvements to help combat these challenges. Demand for our well-loved brands has been demonstrated by an encouraging return to sustained like-for-like sales growth since restrictions have been lifted, and we are confident in our ability to continue our recovery as a market leading operator.”

One day to go before release of updated Premium Database of Multi-Site Companies, 54 businesses being added: A total of 54 new multi-site companies, operating 369 sites, have been added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released on Friday (26 November), at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, includes a number of brands growing through franchise, expanding sports concepts, and regional pub and hotel operators. Premium subscribers will also receive a 3,900-word report on the new additions to the database. The comprehensive database is updated monthly and provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. The database features more than 2,000 companies in total. Alongside this, Premium subscribers will also receive the fifth edition of the New Openings Database, which is produced in association with StarStock, on Friday, 3 December, at midday. It focuses on newly announced openings and upcoming launches in the sector and is updated every month. The fifth edition also includes a 17,000-word report on the new additions to the database. Premium subscribers also receive access to another database – the Propel Turnover & Profits Blue Book, which is produced in association with Mapal Group. The Blue Book, which is also updated monthly, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out plus regular video content and regular exclusive columns from Propel group editor Mark Wingett. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The regular single subscription rate of £395 plus VAT for operators and £495 plus VAT for suppliers remains the same. To subscribe, email

Short-term visas won’t solve labour shortages, says Lidl boss: The introduction of short-term visas will not solve labour shortages in the food industry, the boss of Lidl has warned, adding that the retailer was working “harder than ever before” to keep shelves stocked. Christian Härtnagel, chief executive of the German discount retailer’s UK business, told The Times that there were labour shortages “in every corner you look at the moment”. The supermarket chain is raising wages for its lowest-paid workers, from £9.50 to £10.10 per hour outside London and from £10.85 to £11.30 in the capital from March next year as it battles with rivals to recruit staff. Härtnagel said that only a long-term visa policy would resolve Britain’s labour shortages as the economy transitions post-Brexit. “Economies are recovering across the globe. Why would someone give up a job to come over and they only have six months and then they are running out of the visa?” Boris Johnson used his Conservative Party conference speech in October to urge businesses to invest in staff and said that restricting low-skilled migration would ultimately make the country more prosperous. The government has offered short-term visas for lorry drivers and poultry workers. Lidl, which has about 880 stores in the UK, has set a new target of reaching 1,100 stores across the country by 2025. It employs more than 26,000 people and said its expansion plan would create up to 4,000 jobs. Lidl is Britain’s seventh-biggest grocery store chain by market share, according to Kantar, the market research firm. Härtnagel said he was unable to promise that customers would not see higher prices as a result of the higher staff, energy and transport costs faced by the business. However, he said that the retailer “will always offer the lowest prices in the market”.

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