By Karen Peattie
BAR and restaurant operator Mitchells & Butlers, owner of a raft of famous Scottish pubs including The Horseshoe Bar in Glasgow and Edinburgh’s Deacon Brodies, pointed to a stronger performance in suburban and food-led brands, particularly at the more premium end of the market, as it revealed that revenue for the 51 weeks to September 18 was around 45 per cent of pre-pandemic levels.
With most of the leisure group’s estate open for trading since May 17, revenue had hit 97% of pre-Covid levels and 104% in the most recent eight weeks, mirroring the impact of the gradual easing of Covid restrictions after what has been a torrid time for the hospitality sector.
The group had cash balances of £197 million, with undrawn unsecured facilities of £150m, it said in an update for the period.
Earlier this year, Mitchells & Butlers raised more than £351m from its majority shareholders to bolster its coronavirus-ravaged finances as it burned through huge amounts of cash during lengthy periods of closure.
After the UK’s winter lockdown, pubs were allowed to reopen in April for outdoor trade only, and then in mid-May indoor service at restaurants and pubs was allowed to resume.
“Over this period, sales have been volatile but have generally strengthened overall, particularly since the easing of restrictions on ‘Freedom Day’ in England on July 19,” Mitchells & Butlers said.
Current year figures reflect the benefit of the temporary reduction in the rate of VAT on food and non-alcoholic drink sales.
But Mitchells & Butlers, whose well-known brands include Toby Carvery, All Bar One, Harvester, O’Neill’s, Browns, and Miller & Carter, warned of continued “volatility” in the sector, with chief executive Phil Urban noting: “We are encouraged by the improvement in sales performance following the easing of restrictions.
“However, we are still seeing volatility and a contrast between sales performance at food-led and wet-led brands, highlighting the continuing uncertainty.”
But Mr Urban said that the Birmingham-based pub group’s diverse estate, balanced across a wide range of offers, “puts us in a strong position coming out of the pandemic”.
He added: “We are looking forward to the new financial year, with a renewed focus on our capital plan and generating both sales and efficiencies through our Ignite improvement programme.”
Russ Mould, investment director at AJ Bell, said that fans of Shaun of the Dead “may have been disappointed that, unlike the stars of the film, sitting out the pandemic in their local until it all blew over wasn’t an option”.
“Now punters are permitted to head back to the pub it looks like they are doing so in decent numbers,” he noted.
Food-led rural and out-of-town venues were leading the way, helped by a big surge in domestic tourism and the fact they typically enjoy greater amounts of outdoor space.
“Trading is still soggy for wet-led city centre establishments, though there are at least signs of that situation improving,” he said.
“Pubs are doing what they can to make patrons feel comfortable with
the idea of returning and of preparing for what could be a more difficult winter.
“However, there’s no escaping the reality that the whole sector could face a difficult few months of uncertainty given the sceptre of reintroduced restrictions or even just increased levels of infection reducing people’s ability or willingness to go out and have a few pints.”
Pubs, particularly those without outdoor spaces, have been among the hardest-hit businesses during the pandemic.
In Scotland, industry groups have been critical of the Government’s handling of the crisis in relation to licensed hospitality with the decision to introduce vaccine certificates, or “Covid passports”, a particular bugbear.
Mitchells & Butlers, which runs about 1,700 pubs across the UK, also owns Premium Country Pubs, Sizzling Pubs, Stonehouse, Vintage Inns, Castle, Nicholson’s, and Ember Inns.
In addition, it operates Innkeeper’s Collection hotels in the UK, and Alex restaurants and bars in Germany.
Shares in Mitchells & Butlers closed up at 267.8p.
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