Mitchells & Butlers PLC

Telephone:

0870 609 3000

Website:

http://www.mbplc.com (Opens in New Window)

Activities:

Mitchells & Butlers is the owner and operator of a estate of managed pubs, bars and restaurants, along with two chains of budget hotels that are co-located with its pub-restaurants.

Some 90% of the group’s properties are freehold or long leaseholds and 75% are in residential locations.

The group operates a variety of brands under two core business divisions:

Pubs and bars: Brands include Ember Inns, Hollywood Bowl, Arena, Flares, Edwards, Goose, Scream, O'Neill's, Sizzling Pub Co, Nicholson's, Pop World, Pub and Carvery, Reflex, and Metropolitan Professionals.

Restaurants (including accommodation): Vintage Inns, Harvester, Toby Carvery, All Bar One, Innkeeper's Fayre, Browns, Alex (in Germany), Express by Holiday Inn, and Innkeeper's Lodge.

Sector:

Timeline:

  • 1898: The original Mitchells & Butlers is formed from the merger of two Midlands family businesses that own breweries and pubs. A series of acquisitions and mergers follow.
  • 1961: The company merges with Bass, Ratcliffe and Gretton Ltd to form Bass, Mitchells & Butlers. Although the name changes in 1967 to Bass Charrington and is subsequently shortened to Bass plc, Bass Mitchells & Butlers remains the principal trading name for many years.
  • 1990s: Following the Beer Orders of 1989, Bass splits into Bass Brewers and Bass Taverns. New pub brands launched during the decade include All Bar One and O’Neill’s (1994), Harvester (bought from Forte in 1995), Brown’s Restaurants (1998), and the Alex chain of bars and brasseries in Germany (1999). Bass sells its leased pub estate between 1997 and 1998 and buys 550 pubs from Allied Domecq in 1999 for £2.75b.
  • 2000: Bass sells its brewing division and renames itself Six Continents.
  • 2001: The company sells 988 pubs to Nomura for £625m in February.
  • October 2002: Six Continents announces plans for a £109m demerger of its pub and hotel divisions, which become Mitchells & Butlers and InterContinental Hotels Group a year later.
  • March 2003: Six Continents’ shareholders reject an unsolicited £5.6b bid for the group from entrepreneur Hugh Osmond’s investment vehicle, Capital Management and Investment. Later in the month the company rejects a £2.8b bid from BC Partners for the pubs division, which also attracts interest from CVC Capital Partners and Laurel Pub Company.
  • April 2003:  Mitchells & Butlers (M&B) is created on its separation from Six Continents on 15 April, when it floats on the stock market at 225p a share. The cost of the demerger is £32m.
  • August 2003: The group fails to make the shortlist for the auction to buy Scottish & Newcastle’s 1,450-strong pubs and budget hotel division (which go to the Spirit Group). The exercise costs Mitchells & Butlers £1m in fees
  • November 2003: Mitchells & Butlers raises £1.9b through a securitisation deal to refinance the business, repay existing debt and return £400m to shareholders.
  • March 2006: R20, the investment vehicle for the Tchenguiz Family Trust, indicates that it is planning to form a consortium to make a bid for M&B, which would be merged with the Laurel Pub Company.  
  • May 2006: R20 tables a pre-conditional offer of 550p per share for M&B, which the directors reject as undervaluing the company.
  • June 2006: Tchenguiz abandons his pursuit of M&B, which the group reveals in November cost it £7m to fend off.
  • July 2006: M&B snaps up 239 standalone Beefeater and Brewers Fayre pub-restaurants from Whitbread for £497m.
  • September 2006: The group returns £519m to shareholders after negotiating a refinancing deal.
  • October 2006: M&B sells 102 community pubs to Trust Inns (formerly the Pub Estate Company) for £101m.
  • April 2007: The group joins the FTSE 100, the index of Britain’s biggest financial players.
  • May 2007: M&B reveals it is in talks with Robert Tchenguiz’s R20 to form a joint venture involving the sale and leaseback of the group’s premises.
  • August 2007: M&B announces that a deal in which R20 would buy a 50% stake in 1,300 pubs worth £4.5b is unlikely to proceed until the debt markets improve. However, the group enters debt hedging arrangements for the transaction worth £60m.By mid-September, the delay has cost the group £140m.

Chief Executive:

Tim Clarke

Key People:

Non-executive chairman: Roger Carr
Finance director: Karim Naffah
Managing director, restaurants: Tony Hughes
Managing director, pubs and bars: Mike Bramley

Commentary:

Mitchells & Butlers is a relatively new company but it has a long pedigree. It is now a leading pub operator in the UK (owning 3% of the country's 60,000 pubs) and a significant player in the budget hotel sector.

Since its demerger from Six Continents, Mitchells & Butlers has built also up its franchise operation for smaller pubs and bars from just 18 venues in 2003 to 115 by 2006. This business includes the O’Neill’s pubs at Heathrow and Stansted airports that are run by The Restaurant Group.

Strategy:

“These strong results, with EPS up 15.6%, reflect our leadership position in the growing eating-out market and significant gains in our drinks market share. Our average weekly sales per managed pub are up by 7.6%, with a strong underlying margin performance. We are now serving almost 100 million meals a year. We are successfully converting the pubs purchased from Whitbread last year and are well on track to deliver the targets set out at the time of the acquisition. We remain confident in our future growth prospects.”

Source: Interim results statement, May 2007

Operating Data:

Number of outlets: More than 2,000 (around 3% of the pubs in the UK)
Number of hotels: More than 100 (25 Express by Holiday Inns, 80-plus Innkeepers Lodges)
Number of hotel bedrooms: In excess of 4,000
Number of franchised pubs: 115
Number of staff: More than 37,000

Average weekly sales per pub: £17,5000 (three times the national average)

Pubs & Bars (1,147 managed outlets)
Full-year turnover: £958m (2005: £957m)
Full-year operating profit: £202m (2005: £177m)
Half-year turnover: £515m (2006: £508m)
Half-year operating profit: £92m (2006: £86m)

Restaurants (805 managed outlets, including the lodges)
Full-year turnover: £762m (2005: £697m)
Full-year operating profit: £130m (2005: £114m)
Half-year turnover: £478m (2006: £379m)
Half-year operating profit: £68m (2006: £57m)

Food accounts for 35% of sales while accommodation accounts for 6%

Financial Snapshot:

Full year
Turnover £1.72b (2005: £1.63b)
Pre-tax profit: £208m (2005: £189m)

Half year
Turnover: £995m (2006: £887m)
Pre-tax profit: £89m (2005: £93m)
 
Financial year end: 30 September 2006
Half-year end: 14 April 2007

Address:

27 Fleet Street

Birmingham,
Worcestershire
UK