Miller & Carter chain to double in size over the next two years

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Mitchells & Butlers has shed further light on plans to reshape its estate in the wake of a strategic review of the business, revealing that at the premium end of the scale it will plough its cash into doubling the size of the Miller & Carter chain.

It said that it plans to grow Miller & Carter towards 100 sites by 2018, from a current level of 43.

“This is a brand with a clear and attractive offer to guests, and one which consistently delivers strong like-for-like sales and volume growth,” the company stated.

M&B completed three Harvester to Miller & Carter conversions in the first half, all of which are trading “very well” in their first few months with EBITDA returns well in excess of the targeted 30%.

Following these early successes and given the strength of the Miller & Carter brand proposition, M&B said that it has identified a number of further sites which are suitable for conversion to the brand.

The move comes as it shifts its strategy to organic growth and looks at how it can breathe new life into its existing formats.

The company said: “We believe that we have the best estate in the industry, with an outstanding array of outlets across the country. However, we recognise that elements of this estate have been underinvested in recent years, with capital expenditure having been directed towards necessary back-of-house investment in technology and kitchens, rather than guest-facing areas which would drive sales growth. This under investment is manifest in the disparity between the strong sales performance in sites where we have recently invested as against declines where we have not.”

M&B said it will ensure it makes the best use of its strong brands by matching them individually to the right sites. A full review of the estate has already been completed with a plan for every individual site to be achieved by 2020.

The plan aims to build a more premium estate by converting sites where appropriate in to growth concepts, and with a small number of selected disposals.

A key feature to the estate plan is the level of investment. In order to remain competitive in this environment, and to fully leverage the power of our brands, M&B plan to invest in improving and maintaining amenity levels across the estate:

“As such we have accelerated our investment in remodels and conversions,” it said. “We will aim for 300 to 350 sites per year, equivalent to a five to six year investment cycle compared to the cycle of over 10 years on which we have been operating. This acceleration has begun already, with 142 remodels completed in the first half of this year, compared with 97 in the same period last year. Our estate plan will result in us taking action across the premium, mid-market and value areas of our estate.”

Away from Miller & Carter at the high end, M&B said that Harvester was an example of a fantastic midmarket brand with high-taking sites and great consumer resonance, but which has had some challenges in recent years.

Harvester has been competing in a market which has seen significant new openings, with competitor offerings often being well-invested. By contrast, the group acknowledged that too many of its 233 Harvester sites have been under-invested in guest-facing areas in recent years, making it difficult to remain competitive in their local markets.

“Over time we are looking to reduce the scale of the Harvester estate to a core, all of which will be remodelled within the next 18 months, offering a consistent proposition and a level of amenity to truly leverage the brand’s strength,” M&B said.

Meanwhile, within its value-led sites it is rolling out itssuccessful Pizza & Carvery format, of which there are currently 14 sites that previously traded as Crown Carveries. These sites have been trading well, generating EBITDA returns of around 25 %.

“We will convert around 20 more by the end of FY 2016, with plans for a total of more than 80 by 2018. The format offers a compelling conversion opportunity for a number of our Crown Carveries sites, and selected sites from the unconverted Orchid estate,” it said.

M&B’s plans are already underway. This year, the company has accelerated its capital programme and anticipates delivering around 260 remodels and conversions plus 10 new site openings, at a total capital cost of around £180m. In 2017, proposals are in place to deliver around 300 remodels and conversions, supplemented by around 15 new site openings, at a total capital cost of around £200m.

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