Mitchells & Butlers to scale back menus and ‘electrify’ kitchens to cut costs and emissions

Mitchells and Butlers stock

Mitchells & Butlers is looking to scale back on its menu offering and remove gas across its estate to reduce operating costs and carbon emissions amid a “highly challenging” trading environment, with the hospitality group almost recovering to 2019 sales levels in its last financial year as revenues more than doubled.

The company said it would be undertaking a higher level of product substitution than usual across its estate or the removal of some food items entirely to reduce its food spend, until markets settle down, while also planning to use its scale purchasing power to procure items across all of its brands to “secure volume advantage”.

As the group faces “significant uncertainty” over its energy costs next year, it is also undertaking a transition plan to remove gas from its businesses through the “electrification of kitchens” across its estate, including the trial of onsite renewable energy generation.

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Mitchells & Butlers, which employs some 46,000 workers, is also working on energy reduction projects, including the installation of voltage optimisers that reduce electricity consumption, adding chemical additives to its heating systems to reduce gas consumption, a trial of internet-connected control devices to lower electricity and gas consumption, and training energy ambassadors across the UK to complete site energy audits.

With food emissions being the group’s largest contributor to its carbon footprint, it has also conducted two successful menu trials which “significantly reduced emissions”.

The company is also working with its waste oil collection partner as it looks to grow its estate’s oil recycling rate though increasing the frequency of pickups and trialling a QR code driver validation system.

It completed 170 investment projects in the past year, including 160 remodels, six conversions, the acquisition of the freehold of three sites that were previously leasehold, and opened one new Alex site in Germany.

The conversion programme includes the trial of Browns restaurants in British suburbia, stretching the brand beyond its usual high street locations, with two trial sites opening in the second half of this year.

Mitchells & Butlers saw its total revenue rise from £1,065 million in its 2021 financial year to £2,208m in the year up to 24 September 2022, reporting that profit before tax reached £8m during the latest reporting period, following a loss of £42m in the previous year.

The group reported like-for-like sales growth of 1.1% for its latest financial year when compared to 2019, before the onset of the Covid-19 pandemic, also confirming it had had an encouraging start to its current financial year, with like-for-like sales growth of 6.5% against FY 2022 in the ten weeks since the end of the financial year.

Over the first half of the year, food sales continued to outperform drink, with food like-for-like sales growth of 6.9%, helped by the reduced rate of VAT.

Drink sales continued to be challenging across the sector and drink like-for-like sales declined by 6.9% in the first half, with suburban locations seeing the largest declines.

Mitchells & Butlers boss Phil Urban told Propel that national train strikes planned for next week could cost the company between £1m and £2m in sales, but that he remained “cautiously optimistic” about trading prospects next year.

Mr Urban added that Nicholson’s was the group’s strongest performing brand at present, while Miller & Carter has shown the slowest growth rate in recent months.

Mr Urban said: “The trading environment remains highly challenging, with cost inflation continuing to put pressure on margins and we are ever mindful of the pressures that the UK consumer is facing.  However, we are encouraged by the strength of sales growth at the end of last financial year which has improved further into the early weeks of this year.

“We remain focused on the delivery of our Ignite programme with existing and new initiatives driving cost efficiencies and increased sales, alongside our capital investment programme. Combined with our diverse portfolio of well-known brands, value proposition, strong estate locations and talented people, we are well positioned to face both the challenges and opportunities ahead.”

After seeing 1,000 new apprentices join the company over the past year, Mitchells & Butlers also aspires to recruit a further 1,000 apprentices over the next year, in addition to accelerating the careers of 1,000 current employees.

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Tags : Mitchells & Butlers
Joshua Walton

The author Joshua Walton

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