Pub chain Mitchells & Butlers posted record sales on Christmas Day in the face of ‘significant’ headwinds driven by soaring operating costs.
The firm, which also owns Toby Carvery, said like-for-like sales in the first quarter had increased by 4.5 per cent, boosted by growth in food sales, while sales of drinks increased 3.8 per cent over the period.
This was driven by 10.5 per cent growth over its five key festive days with record sales on Christmas day, and a 7.7 per cent rise over its ‘core’ festive weeks between 14 December and 3 January.
Chief executive Phil Urban said Christmas Day set ‘a new all-time record for the highest sales day, surpassing last year’s benchmark.’
Despite increased sales, Mitchell & Butlers warned it was facing £130million of labour and food inflation costs, which it said it was ‘confident’ of meeting.
Like other hospitality companies, Mitchell & Butlers is struggling with the increase in employer National Insurance contributions and a jump in the minimum wage.
The Toby Carvery owner said it is facing £130m of higher labour and food costs
Changes to the rateable values of venues are also pushing pubs and restaurants to the brink. Mitchell & Butlers previously warned it faced a near £13,000 jump in their business rate bills.
Urban said: ‘Our focus remains on tackling the significant cost headwinds faced by the industry this financial year through the effective execution of our Ignite programme and our successful capital investment programme, driving both cost efficiencies and increased sales.
‘We remain well-positioned to further grow market share in the year ahead by leveraging the strength of our diverse portfolio of established brands and enviable estate locations.’
Shares in the group were up 0.91 per cent to 277.50p on the open.
Adam Vettese, market analyst for eToro, said: ‘This marks continued market outperformance for its diverse estate of over 1,700 sites, bolstered by 51 strategic conversions that should drive future returns through better mix and pricing power.
‘The investment case stays constructive for patient holders, strong brands like Miller & Carter and All Bar One, freehold leverage, and sales momentum point to earnings upside.
‘But near-term trajectory could be range bound unless margins hold firm through inflation and other sector specific risks.’
Fuller’s pub group also cheered an ‘outstanding’ festive season, delivering an 8.2 per cent increase in sales.
Executive chair Simon Emeny said: ‘I am delighted we have maintained our strong growth momentum – in both sales and profitability – and this has been further enhanced with an excellent Christmas period.
The pub chain also announced another share buyback programme of up to an additional 1 million ‘A’ shares.
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