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Business strategy

Building a more balanced business

Our estate comprises over 1,750 sites, of which more than 80% are freehold or long-leasehold. Our focus in this area is to optimise the balance of brands across the estate in order to create long-term value.

We are committed to improving the quality of the estate by exposing it to more premium market spaces and by improving overall amenity. We conducted a full estate review giving us a plan for each of our sites. One outcome of this review was the disposal of 79 sites, which completed earlier in the year. A second was the identification of a section of the estate which we believe may not be positioned to generate value. These are predominantly short leasehold sites in retail and leisure locations, currently trading below expectations. Having reviewed in detail the future trading potential and brand or offer conversion options for these sites this year, we have concluded that several are unlikely to generate a positive return over the remaining life of their lease. We have reflected this judgement in an increased onerous lease provision this year.

One way in which we have increased the premium aspect of the business is through growth of Miller & Carter, our successful steakhouse format which is generating strong like-for-like sales. Over the past year we have increased the number of sites from 52 to 84, with 26 of the additional sites facilitated through conversions of existing sites, and we anticipate reaching 100 sites at the beginning of the next calendar year. Conversions are delivering average EBITDA returns of more than 40%, and we continue to explore various new types of locations for the brand.

We also continue to work on enhancing the amenity of other formats through our remodel programme. For example, we have continued to progress our evolution of Harvester through remodels offering a fresh and contemporary design, bringing rotisserie chicken to the fore, as well as a retargeted offer which is delivering sales uplifts of 10% following investment.

During the year we have also focused investment on our accommodation offer. We operate over 900 rooms across 52 locations and believe we can generate a strong return by upgrading the rooms to be more closely aligned with the feel of the brand they are attached to, which in most cases means premiumisation of the accommodation. We have completed 15 remodels this financial year with sales uplifts of over 20.0% following investment. We intend to continue our investment in accommodation next financial year and, in addition, will complete the build of a purpose-built lodge.

In total we have completed 252 remodels and conversions in FY 2017 (FY 2016 252), which means we are on track to maintain the reduction in our redevelopment cycle from 11-12 years previously to 6 -7 years now.

Instilling a more commercial culture

Instilling a commercial culture is critical to achieving profitable sales growth and we are pleased with the progress made in this area over the year. The four new operating divisions, each containing similar customer types and brands, introduced last year have improved our guest focus and we have made significant progress across a number of initiatives as evidenced by our like-for-like sales improvement.

The growth of social media has made online reputation more important than ever and we have made significant progress in this area over the course of the year. Using reputation.com, an online feedback consolidation tool, managers are now responding to 83% of the growing number of online comments, up from 59% a year ago. As managers have increased their level of engagement with their guests we have also seen average feedback scores increase over the course of the year with total net promoter score having increased by 7.8ppts to 59.

In these times of unprecedented cost headwinds, it is important that we rigorously identify and secure efficiency and cost saving opportunities across the business. Our progress in this area is well advanced with cost savings of £26m delivered in FY 2017 and further initiatives identified for delivery in the current financial year. For example, we have improved two key operational systems during the year.

The first is a time and attendance labour system which requires team members to clock in and out, ensuring that staff are paid accurately for the time worked, whilst also increasing deployment efficiency through enhanced planning tools. In addition, managers are able to access the system from any device and the next stage of roll out will include the capability for team members to swap shifts and for us to share resource across local sites.

The second system which we have updated during the year is our stock control system. This upgraded technology halves the time taken to do stock counts and improves stock control ability, reducing both the instances of an item being out of stock and wastage. The next stage of this development is an auto ordering system which is now in trial.

In addition to this activity, we continue to leverage our scale through our central procurement processes, meaning that we are able to mitigate a large portion of the input cost inflation currently impacting the market. Alongside our procurement efforts, pricing and margin management remain critical activities within the business. We are currently trialling the use of a dynamic pricing model in order to challenge and to fine tune our pricing strategy.

Our focus on maximising bookings continues and we have now set up a central bookings team to take calls which are missed at site, with the conversion rate to a booking of these intercepted calls at 47%.

Food safety and health and safety will always remain a top priority for the business, we are pleased therefore that our safety record improved during the year. At the end of the year 97.5% of our sites were rated good or very good for food hygiene, a higher proportion than any other national pub company.

Driving an innovation agenda

Technology continues to evolve at a rapid pace and we have made good progress against our digital strategy which positions us well to benefit from these changes. Technology now impacts each aspect of the guest journey, from learning about our offers to experiences in site with us and our ability to encourage guests to return. One significant area of progress during the year has been the development of our mobile order at table facility, allowing guests to order food and drinks from their own devices. This technology is currently in trial in O'Neill's with a view to roll out across the brand and to identify opportunities in other brands for development and roll out. The order at table facility will be combined with our existing mobile payment platform within our brand apps, facilitating a digital experience throughout the guest journey.

The demand for food delivery within the industry has remained in growth and we have been positioning ourselves in order to benefit from customers' changing habits which we believe provide an opportunity to capture incremental sales. Over the course of the year we have increased the number of sites offering Deliveroo from 25 to 61. We have also carried out a successful trial with JustEat, allowing us to offer Harvester and Toby Carvery delivery as well as click and collect.


As ever, people are central to our company's success. We operate in the hospitality industry where the guest experience is critical and cannot be delivered without the dedication of our 46,000 employees. In the face of numerous changes within the business, we are pleased that our engagement scores have improved by 2.0 pts and our retail team turnover has reduced by 4.1 ppts. When considered in the context of the average cost of replacing each team member, including the cost of recruitment, management time and training, this represents a significant cost saving.

Our apprentice scheme is vitally important to us. We believe these young people are the lifeblood of the industry and we are delighted to have added a further 1,300 people to our programme during the financial year.

A further advancement in this area is the launch of our new online training platform containing a complete library of training materials and with the ability to plan and track development. This resource allows employees access to materials which will help them to further their career as and when they want to and also allows them to learn remotely using their own device. The platform also encourages employees to connect and share their learning experiences to encourage others.

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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