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Mitchells & Butlers (M&B)

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Module
Business (BS2003)

Institution
Bedford College

Mitchells & Butlers (M&B) FInancial analysis

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Uploaded on March 15, 2025
Number of pages 9
Written in 2024/2025
Type Presentation
Person Unknown

Institution Bedford College
Education Unknown
Module Business (BS2003)

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Introduction & Company Overview

Mitchells & Butlers (M&B) is a prominent operator of managed pubs, taverns, and
restaurants in the United Kingdom. With 1,654 locations in the UK and Germany, M&B
provides services to millions of patrons every year under popular names like Harvester, Toby
Carvery, All Bar One, Vintage Inns, and Miller & Carter. The business was founded more
than 125 years ago and has a solid reputation for providing excellent pub and dining
experiences. By working with more than 1,800 suppliers and employing over 50,000
individuals as of FY 2024, M&B strengthened its vast supply chain network. The business
uses a primarily freehold estate model, which lowers rental liabilities and ensures financial
stability..

Business Model & Strategic Priorities

The M&B business approach prioritizes three important areas:

1. Build a balanced business by improving location-based strategies and ensuring the
proper brand mix.

2. Create a commercial culture to improve decision-making, employee engagement, and
guest experiences.

3. Advancing innovation through AI-driven labor scheduling, automated product
ordering, and digital marketing improvements.

Industry Position & Financial Performance

M&B earned £2.61 billion in FY 2024, up 4.3% from £2.5 billion in FY 2023, despite
inflation, rising wages, and supply chain disruptions. From a £13 million loss in FY 2023, the
company's earnings before tax rose to £199 million. M&B wants net-zero carbon emissions
by 2040 and 50% food waste reduction by 2030. This company works with the Hospitality
Sector Council Sustainability Group to shape industry environmental policies. This research
will compare M&B's financial performance from FY 2022 to FY 2024 against Marston's PLC
and make growth recommendations.

Financial Performance Analysis (Part A)

2.1 Revenue & Profitability Trends

Revenue Growth Analysis

Mitchells & Butlers (M&B) has demonstrated consistent revenue growth over the past three
financial years, driven by increased customer demand, effective pricing strategies, and
operational efficiencies. In FY 2022, the company reported £2,208 million in revenue, which
increased by 13.36% in FY 2023 to £2,503 million. The trend continued in FY 2024, with
revenue reaching £2,610 million, reflecting a 4.27% increase from the previous year. Despite
facing inflationary cost pressures and rising operational expenses, M&B has successfully
expanded its market share. The company outperformed the market with 6.1% like-for-like

, sales growth, as tracked by the CGA Business Tracker, indicating a strong recovery in
consumer spending in the hospitality sector .

M&B’s profitability also showed significant improvements, particularly in FY 2024.
Adjusted operating profit, which was £240 million in FY 2022, declined slightly to £226
million in FY 2023 due to higher energy, labor, and food costs. However, FY 2024 saw a
substantial rebound, with adjusted operating profit increasing by 38.05% to £312 million,
reflecting the success of cost-saving initiatives under the Ignite efficiency program .

Net profitability dramatically. In FY 2023, M&B reported a £13 million loss before tax, but
this reversed in FY 2024, where profit before tax surged to £199 million. The net profit
margin, which was negative in FY 2023 at -0.16%, rebounded to 5.71% in FY 2024,
reflecting the company's ability to optimize costs while maintaining revenue growth .

2.2 Liquidity & Solvency Analysis

Liquidity Ratios

Metric FY FY FY Formula
2022 2023 2024

Current 0.51 0.41 0.54 Current Assets / Current Liabilities
Ratio

Quick Ratio 0.48 0.38 0.49 (Current Assets - Inventories) / Current
Liabilities

Liquidity remains an area of concern for M&B, despite strong operational cash flows. The
current ratio, which measures short-term financial stability, declined from 0.51 in FY 2022 to
0.41 in FY 2023, indicating that current liabilities exceeded readily available assets.
However, in FY 2024, the ratio improved to 0.54, suggesting better cash flow management
and reduction in short-term liabilities .

Similarly, the quick ratio, whs inventory from short-term assets, showed a downward trend in
FY 2023, falling to 0.38 from 0.48 in FY 2022. It improved slightly to 0.49 in FY 2024,
reinforcing the company’s efforts to enhance liquidity through higher cash generation and
improved working capital management.

Debt & Solvency Analysis

Metric FY 2022 FY 2023 FY Formula
2024

Debt-to-Equity Ratio 1.31 1.25 1.48 Total Liabilities / Equity

M&B’s debt levels increased in FY 2024, raising some concerns about financial leverage.
The debt-to-equity ratio, which was 1.31 in FY 2022, dropped to 1.25 in FY 2023 but rose

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