UK pub and restaurant operator Mitchells & Butlers (M&B) reported flat like-for-like sales for the third quarter ending July 18, primarily due to a 2.4% drop in food sales. This decline was attributed to an extended heatwave that deterred customers from consuming hot meals, particularly at food-led brands like Toby Carvery and Miller & Carter. Despite this, drink sales saw a 2.6% increase, partly boosted by the World Cup, and the company also noted that the earlier timing of Easter this year negatively impacted like-for-like sales growth by 0.8 percentage points.
M&B's shares fell by as much as 4.6% to 260.50 pence in London trading following the announcement. The company, which also operates brands like All Bar One and Harvester, maintained its full-year cost inflation guidance of around £120 million but expressed confidence in meeting its annual expectations due to strategic investments and initiatives. Year-to-date, M&B's like-for-like sales are up 2.2%, with food sales increasing 2.0% and drink sales 2.5%, while total sales for the year-to-date rose 1.3%.
The broader UK pub sector also saw impacts, with another major pub group, JD Wetherspoon, issuing its fourth profit warning of the year. This was attributed to surging food and energy costs, a rising business rates bill, and lower-than-anticipated sales in its final quarter. Wetherspoon's shares fell by over 9% on Wednesday and are down 7% year-to-date, indicating widespread challenges for the industry. A heatwave in June alone cost the UK economy roughly $1.5 billion in lost working hours, further illustrating the widespread economic effects of the extreme weather.
