Poor weather takes froth off sales at Mitchells & Butlers’ pubs business

● Same-floorspace sales dip 1.2% in latest trading period amid rainy late summer

Pubs group Mitchells & Butlers (M&B) has disclosed a hit to drinks sales as a soggy end to summer has taken its toll on pub footfall.

The group, whose chains include Miller & Carter and O’neill’s, said like-for-like drink sales fell 1.2 per cent in the eight weeks to 16 September – a setback to the 3.8 per cent surge in the previous ten weeks.

Mitchells & Butlers, which has about 70 outlets in Scotland, pointed the finger at the poor weather in August continuing into this month, although it said it had still outperformed the market.

Total sales, including new openings, edged 0.3 per cent higher in the most recent eight weeks after more food sales, which rose 1.5 per cent, an improvement on the 1.3 per cent rise in the ten weeks to 22 July. M&B, whose other chains include Toby Carvery and Nicholson’s, said in a trading update yesterday: “Following a strong sales performance in early summer, the market has been more challenging in recent weeks, particularly given poor weather this year up against a sunny period last year which has specifically impacted drink sales.”

The group said like-for-like sales in the 51 weeks so far of its financial year are up 1.8 per cent, with drink ahead 2.1 per cent and food up 1.4 per cent.

But the company, which has previously warned that customers might suffer from rising costs linked to the national living wage, repeated that soaring costs will impact its profit margins for the full financial year.

The industry has also been under pressure from rising energy bills and the increase in input costs from the weakness of sterling since the Brexit vote last year.

M&B chief executive Phil Urban said: “Whilst the weather in August and September has adversely affected the market we remain encouraged that our like-for-like sales performance continues to outperform the market.”

“We continue to work hard to mitigate the cost headwinds faced by the industry,” he added. The company is overhauling its pub estate, targeting more upmarket offerings. This has included M&B launching Sizzling Pizza & Carvery and Sizzling Pub & Grill in an attempt to fight back against new competition in the eating out sector.

Analysts at brokerage Goodbody called the M&B trading update “solid”, adding that the underlying sales growth provided “further evidence that management’s estate refurbishment plan is steering the group in the right direction”.

Shares closed down 4.4 per cent or 10.8p at 236.4p.