Mitchells & Butlers faces major challenges in turnaround plan

The past few years have been difficult for Mitchells & Butlers, but it finally returned to profitability during its second half period. However, it does look like the business is running very hard just to achieve the smallest gains.

On a full year basis, the results are ugly reading as more than £1 billion went through its tills but it still lost money as the period included the lockdowns that started in November 2020 and January 2021.

“It is now making some progress on sales growth, but the amount is tiny, and the outlook is far from favourable,” said AJ Bell’s Russ Mould.

“Pub and restaurant operators traditionally thrive in December from Christmas parties. Nervousness on behalf of many companies could see reduced staff party volumes this festive season, particularly as Covid rates are shooting up. Managers won’t want to risk employees getting ill and a lot of people still feel uneasy about mixing in a crowded room.

“Cost inflation is another big pressure on the business, and Mitchells & Butlers could find it hard to pass this on to the customer in the form of higher prices.

“Mitchells & Butlers has long been a laggard in the pubs and restaurant sector, and one can’t help feel it needs to sharpen its focus. The company says it tries to offer something for everyone, whether that’s a sleepy country pub or a livelier atmosphere in a city centre establishment.

“However, the group has 17 different brands which seems a bit excessive. Perhaps the current environment might force the group to focus harder on what it does best, rather than being something for everyone?”