Mitchells & Butlers today said it was “committed” to getting back to a 6-7 year investment cycle on its sites after resuming its capital programme.
The 1,700-strong pub and restaurant operator was forced to pause much of its project work during the pandemic, but after returning to profitability since restrictions were lifted it is aiming to get back to previous levels of activity.
The company cautioned that it is “likely to encounter short-term supply issues in terms of material procurement and contractor availability” which may affect progress in the current financial year, but said refurbs and conversions continue to be a “key focus” for the business.
M&B’s capital programme has traditionally been a vital part of its growth strategy as it has proven to deliver value by improving the competitive position of its pubs and restaurants within their local markets.
The company, which generated sales of just over £1 billion in its latest financial year – £846m of it coming in the second half when restrictions on the hospitality sector were fully lifted – is also continuing with its Ignite programme, which aims to build long-term value creation plans in areas such as labour and technology.
Having reopened its project office, M&B is working on 43 fresh initiatives, some of which are already being implemented in the business.
Figures published today show just how heavily the pandemic affected its project work. Capital expenditure for the year to 25 September 2021 totalled just £33m versus £108m in the previous year as management sought to preserve cash.
The latest spend comprises £29m from the purchase of property, plant and equipment and £4m in relation to the purchase of intangible assets.
CEO Phil Urban said: “The trading environment remains challenging and cost headwinds continue to put pressure on the sector. However, we have strengthened our balance sheet and returned to profitability and cash generation, allowing us to resume our capital plan and Ignite programme, which will deliver sales and efficiency improvements to help combat these challenges.
“Demand for our well-loved brands has been demonstrated by an encouraging return to sustained like-for-like sales growth since restrictions have been lifted, and we are confident in our ability to continue our recovery as a market leading operator.”