UK's Mitchells & Butlers tweaks menus to tackle costs

  • Annual operating profit jumps over 53% to 124 mln pounds
  • Shares put on about 8%, touch over two-month high
  • Sales in first 10 weeks of FY23 rise 6.5% on LFL basis

Dec 7 (Reuters) - Mitchells & Butlers (MAB.L) said on Wednesday it would tweak menus and try to reduce energy use, as the British pub and restaurant group seeks to limit the impact of surging costs after sales rebounded to exceed pre-pandemic levels.

Shares in the company, which runs more than 1,700 restaurants and pubs in Britain under brands including Harvester and All Bar One, rose about 8% after it reported a 53% jump in annual operating profit to 124 million pounds ($151.5 million).

Following this year's high energy prices as a result of the Ukraine war, Mitchells & Butlers also said it was seeking to cut electricity use and was putting chemical additives into its heating systems to reduce gas consumption.

"The trading environment remains highly challenging, with cost inflation continuing to put pressure on margins and we are ever mindful of the pressures that the UK consumer is facing," CEO Phil Urban said.

"In the current situation where food costs are at such elevated levels, we are quite agile in the way we do our menus," Urban told Reuters.

For example, when prices of lamb were high, M&B's Toby Carvery brand took it off its menu before bringing it back when costs eased, Urban said.

It has also replaced expensive garnishes with cheaper ones.

In the 12 months to October, prices of food and non-alcoholic beverages rose at the fastest rate since 1977, Britain's Office for National Statistics said last month.

M&B had raised its prices of food at its pubs by 5%, less than inflation of over 10%.

Sales in the first 10 weeks of this financial year were up 6.5% on a like-for-like basis from the year-ago period, and 9.2% over the corresponding phase in the pre-pandemic fiscal year 2019, the company said.

Stifel analysts in a note said the continued recovery of sales was encouraging.

($1 = 0.8187 pounds)

Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Rashmi Aich and Barbara Lewis

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