Food, glorious food for M&B as drink slips into second

But the group warned that soaring food and energy prices will squeeze the business into next year.

M&B, which also owns the All Bar One, Toby Carvery and the Sizzling Pub Co chains, said rising inflation and the uncertainty around household spending in the UK will both pose a chall- enge.

As a result the group expects its full-year pre-tax profits to be at the lower end of current market expectations.

Finance director Tim Jones said: “In terms of operating profit the consensus is about £303m and that would fall down to about £156m to £160m at the pre-tax level.”

Market expectations for pre-tax profits had ranged between £157m and £192m, with the average forecast standing at £165m.

The company reported 7.5 per cent total sales growth in food in the 28 weeks to April 9, while total drinks sales grew 1.7 per cent in the same period.

M&B has re-shaped itself into a food-led business, with around 1,600 restaurants and pubs across Britain. Nearly three-quarters of the group’s sales come from meals and drinks purchased alongside food.

M&B, which earns about nine per cent of its sales in Yorkshire and the Humber region, made an underlying pre-tax profit of £63m in the first half to April 9, down 14 per cent reflecting the sale of the 333 pubs.

M&B, which announced in March that chief executive Adam Fowle will leave the company, said the recruitment of a new chief executive is progressing well.

Mr Jones said it is possible the company could resume dividend payments in 2012.

But RBS analysts said in a research note: “There is a slight frustration that the dividend has not yet been re-instated or a new chief executive announced.”

The group’s restructuring programme has involved investing £53m in 29 new openings and 31 conversions. Looking ahead, it hopes to open 50 further sites and complete 70 brand conversions.

Interim chief executive Jeremy Blood singled out Harvester as a strong performer in the first half of the year, supported by a new advertising campaign.

He said: “We have successfully positioned Mitchells & Butlers more firmly within the eating-out market. We have a healthy balance sheet and are investing for further growth.”

Douglas Jack, analyst at brokers Numis, held his ‘buy’ recommendation as “trading is good and it should only be a matter of time until dividends are resumed and a new chief executive appointed”.

Numis held its forecast for full-year profit at £165.2m, down from £175m last year.