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Business strategy

Our priorities

Building a more balanced business

Our priority continues to be to reach the optimal balance of brands and formats across our high-quality estate, of around 1,800 largely freehold sites. Last year we carried out a full review to identify the ideal brand for each site, and since then we have been working towards achieving this profile, aiming to premiumise where possible to take advantage of higher growth and more resilient markets, alongside improving the general level of amenity and shortening the cycle within which all of our sites are invested.

We have made good progress against this plan. Our main growth focus has been Miller & Carter, our specialist steak format which continues to be a great success both for new openings and conversions of existing sites. We now have 67 Miller & Carter sites open and are on track to reach around 100 sites by the end of 2017. These investments perform very well for us, and offer possible growth opportunities even beyond the 100-site target. We have also continued our conversion of sites into the Stonehouse Pizza & Carvery format, now in 72 sites, and extended the Harvester Feel Good Dining concept, now in 55 sites.

In all, we completed 172 remodels and conversions (H1 2016: 164) in the first half of the year, keeping us on track to achieve our aim of a 6 to 7 year cycle of reinvesting in each of our sites. We have opened 6 new sites, and expect to complete around 15 new openings in the full year, mostly in All Bar One, Alex and Miller & Carter.

We also identified a number of sites for disposal last year. This followed several years of limited disposals, and was an output of the estate review outlined above. We are currently in negotiations to sell 78 sites which we would expect to complete before the end of the year. The annualised EBITDA of these disposals is around £5m.

Instilling a more commercial culture

Instilling a more commercial culture is about the way in which the organisation operates and strives for profitable sales growth. We are pleased with the progress in this area. The four divisional structure is now embedded and working well. This year we will update our labour rostering system, which will enable us to operate Time & Attendance across the business, as well as giving our managers and team the ability to access the system from their own devices.

Our use of social media is becoming increasingly important as a tool to interact with our guests, such that we are now generating more than 40,000 pieces of customer feedback every month. This provides a rich source of data as well as the opportunity for our managers to engage directly with our guests. We have installed a social media consolidation tool across all our brands, which enables our managers to see and respond to feedback from multiple social media channels. Data suggests a clear link between 'scores' achieved on social media and performance measures, including like-for-like sales, complaints per meal sold and net promoter score.

Our commercial culture also extends to discipline around managing our cost base, as we strive to mitigate the substantial cost pressures that we, and the industry, face. Our scale clearly helps us in this regard. Our procurement teams have worked across our supplier base to where possible, substitute or consolidate products and suppliers while maintaining the quality of product offered to guests. We have also been focusing on costs at an operational level and, whilst we feel that the organisation is already lean in the way it operates, we have given each of our sites a daily challenge to work towards in terms of cost savings – through challenging productivity, energy usage, and food and drink waste to name a few. This gives us a clear goal to work towards and engages the teams, whilst taking care not to take actions which will impact upon the guest experience. We are pleased with the progress we have made, both centrally and at an operational level, and expect to be able to mitigate an element of the full-year cost headwinds.

Drive an innovation agenda

We continue to drive our innovation agenda by working to improve our technological and digital capability, and developing new products and concepts.

Innovation and technology are critical areas for us as a business, in terms of efficiency, attracting and interacting with guests and remaining competitive in our markets. We aim to use our technology to improve all aspects of the customer journey, which sometimes means making seemingly small adjustments to make a significant difference. Examples of our progress in this area include:

  • Continuing to increase the level of online bookings, such that now around 90,000 bookings are made a week through our own websites and third-party partners;
  • A new site-level website template which is being rolled out, now live across 170 sites, and provides us a platform to easily and quickly replicate new websites for site or brand concepts;
  • Improvements to the guest Wi-Fi, both through increasing the network speed and separating the back office usage; and
  • The trialling of alternative payment devices, which we expect to build on with a trial for guests to order at tables later this year.

We have continued to extend our use of delivery, which is now live across more than 50 sites and in three of our existing brands, plus our two new concepts Chicken Society and Son of Steak. We are convinced that this is an area of the market which is here to stay, and the demand appears strong across towns and cities nationwide. On average we are still seeing delivery sales of around £300 per site per week, showing the strength of the offer as we continue to roll out. Certain individual sites trade well in excess of this amount, with the two new concepts being particularly strong on delivery sales. We currently partner with one provider, but are close to extending the offer into other regions through alternative suppliers and believe that a delivery offer may ultimately be applicable to around a quarter of the estate.

As well as using technology to enhance the guest experience, we are also using technology to improve the way we work. These improvements may appear small, but can make a significant difference to our teams. Based on feedback, we have issued all of our house managers with laptops to facilitate more flexible working on site. We have also introduced enhancements to our telephone system to allow bookings to be routed through a centrally operated telephone line, rather than the team having to manage phones directly at sites during peak trading periods.

We have done much to improve our digital marketing in the last 18 months, by consolidating all of our customer information into one database, trialling flexible offers through email and other channels, and by developing apps for a number of our brands. We now have six brand apps (Harvester, Toby Carvery, All Bar One, Nicholson's, Ember Inns and Browns), with an aggregate of over 800k downloads so far. We have begun testing a loyalty function within some of these apps, and in the months ahead will develop this further to tailor rewards to guests based on their individual usage. This enables us to understand our guests' preferences more clearly and therefore to have much more personalised interaction with them.

Our work on innovation also extends to the ongoing development of new products and concepts. Existing brands are continuously looking to evolve their offers, with examples ranging from the introduction of a low calorie prosecco in a quarter of the estate and the development of vegan dishes, to exploring popup and partnership opportunities to expand the reach of our brands. We have also opened two new concepts this financial year: Chicken Society and Son of Steak. Both are based on a simple but high-quality offer, with a focused concept aimed at millennials, who are arguably underrepresented across our existing portfolio of brands. Chicken Society opened in Finchley in December, and Son of Steak in Nottingham in March. We are encouraged by the early trading in both and whilst we expect to open more sites in the months ahead, we will take time to assess the performance and the business model of each before deciding whether a scale rollout is appropriate. We have always been very clear that, whilst the concepts may end up being a future conversion opportunity for the estate, it is more important that they help us develop our own culture of testing and learning, and being able to innovate at pace – benefiting both future new trials and innovation within our existing brands.

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Contact Us

A photograph of Tim Jones
Tim Jones Finance DirectorCarlie WakefieldPA to Finance Director +44 (0) 121 498 6112
A photograph of Denise Burton
Denise Burton Deputy Company Secretary +44 (0) 121 498 6514
Amy De Marsac Head of Investor Relations +44 (0) 121 498 6514