All Bar One boss warns of pub sector ‘shakeup’

UK pub chain Mitchells & Butlers, which owns All Bar One, is expanding its partnership with Deliveroo in response to rising pub costs, with its boss warning of an imminent “shakeup” of the pub sector.

Mitchells & Butler is expanding its partnership with Deliveroo to include some 100 All Bar One and Browns outlets.

Mitchell and Butlers, which also runs Browns and Harvester pubs, saw sales edge up 0.5% in the last eight weeks, but like-for-like sales across the year were 0.8% lower, dragging revenue from £2.1bn in 2015 to £2.09bn this year. The company’s food sales dropped by 1.4% year-on-year, while drinks sales slipped by 0.1%.

Overall, its full year pre-tax profits to 24 September dropped by 25% to £94 million, down from £126 million the previous year.

Now, the company’s boss Phil Urban, who took charge of the company in September, has warned of further challenges for the pub industry as cost pressures likely to continue into next year, as reported by The Telegraph.

Speaking to the paper, he warned that government-led changes will add 3.5% to Mitchells costs, with the pub sector now facing its first full year of the National Living Wage and a potential increase in the National Minimum Wage, which Mr Urban says will take a toll.

“We came out last year questioning how anyone is going to be able to absorb these costs over the long-term, especially if you don’t have the scale of a large national estate,” said Urban.

“We may have been the first to be explicit about our concerns but these changes are going to bring a shakeup for the industry.”

In response to ongoing changes, Urban plans to sell off 75 of its pubs in order to upgrade 300 others, and is extending the company’s partnership with premium food delivery service Deliveroo at its All Bar One and Browns outlets.

A trial with Deliveroo began in August at 25 sites for food orders, with Urban now confirming that this service will expand to include around 100 of the company’s London outlets over the next 12 months.

In July, Deliveroo launched its alcohol delivery service, partnering with the likes of Majestic, Brewdog and most recently Heineken to deliver alcohol, as well as food, to the doorstep of its users. It has also signed up a number of independent wine merchants including Jeroboams’, Lea & Sandemans and The Sampler in London.

The launch came after the company quietly built a portfolio of around 100 drinks partners, which it told db was set to surpass 160 booze retailers by the end of quarter three. Previously, customers could only order drinks from the restaurants they ordered food from. The delivery business also said it was targeting independents wine merchants, craft beer shops and bars across the UK, as it looks to to extend its reach into new areas.