Food sales boost restaurant group's plans for expansion

The group – now under the chairmanship of Debenhams boss John Lovering after a boardroom coup in January – reported underlying pre-tax profits of 73m in the six months to April 10, up 55 per cent on a year earlier.

M&B said like-for-like sales lifted 1.9 per cent in the nine weeks since the first half, marking a rebound on a difficult tough second quarter, when trading was hit by the rise in VAT and wintry weather.

Adam Fowle, chief executive of M&B, said the results "underpin our confidence" in a strategy, revealed in March, to focus investment on six mid-market eateries, including Harvester, Toby Carvery, Crown Carveries and Sizzling Pub Co.

M&B's figures showed strength in food helped offset a sluggish drinks market, with sales up 4.3 per cent and 0.3 per cent respectively in the year so far to May 15.

The group, which owns and operates around 2,000 pubs nationwide, hopes its revival plans will help boost profit margins.

It plans to further increase customer spend through changes to its menu, having already seen average spend per head rise 1.3 per cent for food and 2.6 per cent across drink sales in the first half.

But M&B said market conditions remained "difficult" as consumer spending continues to come under pressure and following the end of the temporary VAT reduction in January.

M&B has also endured a vicious boardroom tussle that saw key shareholder Joe Lewis succeed in ousting most of the firm's leaders at the start of the year.

The new board has since approved a plan to accelerate moves towards its food-led businesses, while pulling out of more price-sensitive drinks-based operations.

M&B wants to dramatically increase the scale of its restaurant brands, taking the familiar roadside names into smaller town centre locations.

Harvester could double under the plans, with the current 170 sites growing to a potential 400.

Toby Carvery is earmarked for an increase from 133 to 300, while plans could see Crown Carveries expand from 111 to 300 venues, Sizzling Pub Co double to 400 sites, Premium Country Dining could go from 63 sites to 150 and Vintage Inns from 222 to 350.

M&B, which also owns All Bar One, is also offloading non-core assets and slashing costs, earmarking up to 25m in savings this year.

But it said it now has room to invest up to 25m in expansion in the second half.

The group, however, is fighting to plug a hole in its pension fund and revealed that the deficit had widened 400m from 250m in 2007. It upped payments to the scheme from 24m to 40m in April.

M&B was one of few stocks to make gains yesterday, but analyst Hugh-Guy Lorriman, at Seymour Pierce, added a note of caution: "Rising like-for-like sales in the year to date have been driven principally by price or 'menu engineering', and we prefer to remain cautious on the sustainability of this, considering the volatility of a predominantly walk-in trade.

"We remain long-term sellers of M&B based on what we perceive to be a high-risk situation at the level of ownership, management and balance sheet."