Weaker food sales put the brake on Mitchells & Butler’s growth

The group, which operates 1,600 sites in the UK including All Bar One and O’Neill’s, saw 2 per cent like-for-like sales growth in the eight weeks since September 25, compared to 2.6 per cent in the previous year. The slowdown was driven by weaker food sales growth, which as the biggest selling product, making up 48 per cent of total sales, is key to overall performance.

Elsewhere, Mitchells, which is going through a major shake-up in the boardroom following several departures in the last year, reported a 7.7 per cent decline in pre-tax profits to £156m as revenues fell 9.3 per cent to £1.8bn.

Mitchells, which serves an estimated 125 million meals and 425 million drinks a year, said it expects inflationary pressures to persist in the new financial year, particularly from energy, duty and food.

However, executive chairman Bob Ivell said he was confident that Mitchells will grow in the year ahead.

“Mitchells & Butlers is a good business and our ambition is to make it a great business,” he added.

“We have a number of initiatives in place to do this including the simplification of our central support functions to enhance business performance.

“Overall, this gives us confidence in successfully growing the business in the year ahead.”

Mr Ivell is in temporary charge after Jeremy Blood and Adam Fowle left in quick succession, while the company also lost its chairman Simon Burke earlier in the year.

Mr Burke’s departure reportedly came after he fell out with billionaire activist investor and owner of Tottenham Hotspur football club Joe Lewis, who owns nearly a quarter of the shares in the company.

Mr Lewis recently tried to buy Mitchells but a second indicative bid worth £940m was rejected as a “significant undervaluation” of the business.

Mr Lewis, who remains the company’s biggest shareholder with a stake of 24 per cent, abandoned plans to take over the business in October, citing M&B’s weak trading and volatile market conditions.

M&B scrapped dividend payments in 2008 in order to pay down debt.

It said it would continue to monitor operating cash flow generation and capital investment opportunities before taking a decision on the resumption of payments.

Shares in Mitchells & Butlers were down slightly after the update.

Douglas Jack, analyst at Numis, said: “Plans for expansion and management recruitment hold the key to unlocking the potential upside.”