Mitchells & Butlers sales slow amid inflationary pressures

Mitchells and Butlers has reported that like-for-like sales have fallen 0.9% in the 42 weeks ended 16 July 2022 (Q3), compared to pre-Covid levels in 2019, dropping from a 3.8% growth in Q2.

The company said inflationary cost pressures continue to present a “major” challenge to the business and to the hospitality sector as a whole, and the period included the Jubilee weekend, industrial action and the recent hot weather which impacted sales.

Overall, like-for-like sales grew 2.2% for the first five weeks of Q3, starting the quarter “strongly”. Food sales have been the main driver in sales for the company in Q3 with 2.9% growth, although drink sales have dropped by 1.3%.

However, total sales have declined by 1.6% in the year-to-date due to temporary covid-related closures in the first part of the year and site disposals since 2019.

Overall, Mitchells and Butlers has completed 116 conversions and remodels in the financial year to date.

Looking ahead, Mitchells and Butlers said that whilst the near-term outlook is unchanged, it now seems likely that utilities, wages and food costs will persist at or above current levels into the next financial year, increasing and prolonging the medium term impact on margins.

The company added that despite challenging conditions, its Ignite programme of work remains at the core of the business’ long-term value creation plans, and it continues to focus on initiatives which enhance efficiency and productivity, helping to offset inflationary cost pressures.

Phil Urban, chief executive, said: “The trading environment remains very challenging with inflationary costs squeezing consumer discretionary spending and putting pressure on the industry’s margins.

“In the face of these challenges, we remain focused on driving sales and efficiency through our Ignite programme and pushing forward with our capital investment plan which we are pleased to see delivering strong sales uplifts.”