A bumper twelve days of Christmas for Mitchells

The group, which serves around 125 million meals and 430 million drinks a year, said like-for-like sales over the key 12-day Christmas trading period between December 23 and January 3 increased 6.7 per cent.

That offset the impact of the weather on the start of the company's most recent trading period, resulting in growth of 2.5 per cent in the nine weeks to January 22.

M&B, which earns about nine per cent of its sales in Yorkshire and the Humber region, said the improvement continued to be driven by demand for food, with like-for-like sales up 5.5 per cent compared with just 0.5 per cent for drinks.

"This is a very good start to the year... helped by a strong Christmas performance," said chief executive Adam Fowle.

"These trading results, together with the encouraging performance from the two new Harvester retail park sites and the improving new openings pipeline, show that we are on track to implement our growth strategy and indicate the future potential within the business."

The group is concentrating on food sales as part of an overhaul announced in March to invest in its six food-focused brands, including Harvester, Toby Carvery, Crown Carveries and Sizzling Pub Co.

Last year it sold 333 'non-core' pubs to private equity firm TDR Capital – the biggest pubs sale for years – to concentrate on food-led venues. The 373m sale, which sped up its exit from the late-night bars market, also aimed to minimise the squeeze from high youth unemployment.

Despite buying 22 Ha Ha bars late last year, M&B said it has driven its net debt below 2bn.

Food now accounts for around 47 per cent of the company's sales and M&B estimates around two-thirds of total sales relate to a food occasion.

But the group echoed caution from other pubs groups around the economy, as the public sector spending squeeze, VAT increase, commodity price increases and weak consumer confidence pose challenges for the leisure and hospitality sector in 2011.

M&B said: "The business continues to perform well, although we are cautious on possible future trends in customer discretionary income and input cost increases in the year ahead."

M&B, which has a 1,600-strong pub and restaurant estate, plans to open 50 new sites across its brands this year, as well as 70 conversions in its existing estate.

Shares in the group lifted 4.1 per cent to 357p.

"We are just 10 months into the restructuring and we are at the easier stages of the transformation, nevertheless the trading statement reads well as a progress report," said analysts at stockbrokers Evolution Securities.

"The weather impact was broadly neutral with a better January offsetting snowy December. No change to forecasts: margins are broadly unchanged but VAT has now increased and it's a tougher consumer outlook.

"Capital is being deployed rapidly: it will achieve 70 conversions this year with a new site pipeline of 50 sites."

Analysts at Altium Securities issued a buy recommendation and said the group is "clearly outperforming the market".

"In terms of outlook the business is continuing to perform well but there is the expected caveat with respect to consumer discretionary income pressures and also input cost pressures," they said.

"Overall, the year has started very well and although the current rate of growth is unlikely to be sustained, a combination of strong market positioning and significant self-help measures should see another year of meaningful progress."

Change of direction

Mitchells & Butlers recently announced the departure of chairman John Lovering.

Mr Lovering, who oversaw the company's change of direction to focus on food-led pubs, joined the M&B board in January last year following a high-profile shareholder row with Bahamas-based Joe Lewis.

"It has been a huge privilege to be chairman of Mitchells & Butlers," he said. "The company is now on a much firmer footing than when I joined last year.

"Group profits have improved significantly in the last year thanks to our focus of switching from volume to spend per head and our core brands are successfully implementing their site expansion goals."