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2026.09.23 | TB | Consumer | Mitchells & Butlers Cost Headwinds

原标题：Mitchells & Butlers – Mitigating Cost Headwinds, Like-for-like Growth Sustainability & Incremental Opportunities

#consumer

Third Bridge · 2026-09-23

Analyst-led • 11 Sep 2026

Companies: MAB GB

Andrew Brown (AB) Business Development Manager at Greene King Ltd

Alex Doran (AD) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

AD [00:00:02]: Hello, and welcome to Third Bridge's Interview entitled Mitchells & Butlers – Mitigating Cost Headwinds, Like-for-like Growth Sustainability & Incremental Opportunities. I'm Alex Doran, and I'll be facilitating today's Interview with Andy Brown, Business Development Manager at Greene King.

Before we get started today, could I please ask you to state I agree or I disagree to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

AB [00:00:47]: I agree.

AD [00:00:48]: Could you please share an introduction to your background?

AB [00:00:59]: Yes, absolutely. I've been working in the industry since 1994, where I started part time. My career grew with what was Bass Taverns, Bass plc, which then became Mitchells & Butlers. I became a manager for Mitchells & Butlers, working with the Harvester brand in 2000, would you believe? Then moved on to work for a brand called Toby Carvery. I had a brief time out working with another company called Tubsy's, but that was a short period of time. Work with Toby Carvery, then became an area manager or what M&B called a retail business manager with a brand called Nicholson’s in central London, the city and the West End, where I worked until 2016. I left, had a very brief stint at Stonegate and went pretty much worked for a company called Merlin Entertainments as the global operations manager. My role there was to support the F&B brands in all of the Merlin attractions globally, whether it be a theme park or a smaller entertainment venue, and that included opening theme parks such as Legoland Dubai and Legoland Japan, the F&B part of that, which was very, very interesting. I then spent a period of time working for myself, consulting and then decided I want to get back into my kind of historical role as an area manager and joined my current employer in late 2018, where I remain.

Questions

[00:02:43] How have consumer confidence and demand shifted over the summer of 2026? What have you observed in the broader market, and what could this mean for H2 2026 and beyond?

AB [00:03:03]: It's been an interesting summer because we had the weather, the heat wave, which actually surprisingly impacts more than some people would think. Interestingly, a lot of sort of pub brands, restaurant brands when the sun comes out, you think trade would increase. Actually, over the summertime, the number of heat waves you had got to the point where it was too hot in some cases for people who want to sit in whether it be a public garden or a restaurant, even if air conditions, so the weather played a massive impact. The World Cup certainly impacted restaurant brands where you watched during the football and there were a number of big matches, even though the timings were odd, that's still impacted because even a match starting at 10:00, people would plan events early in the day and not attend an F&B establishment, so that was an interesting factor, and then the usual noise around cost of living, there's a lot of focus in everyone's pockets in terms of what they can spend, what they have disposable. Especially over the summer and if you're choosing a holiday, etc, etc, people's money goes a lot less further than it once did, so that's definitely played into the last kind of, what, eight weeks really.

[00:04:30] As you mentioned, there were a few different impacts from the weather, the World Cup and the ongoing cost of living. Have you noticed any deterioration or improvement in underlying confidence if you strip out the weather and the World Cup?

AB [00:04:56]: Yes, it's fairly easy to tell. I think back, and this is not new to this year. This has been going on for a number of years, probably since COVID, if I'm honest. I think this year, it was just a lot more extreme because the weather had a massive impact, more so than ever before this year, but I think this side of COVID, which is kind of the middle point isn't of how we look at everything financially, certainly in our industry, and this will be, say, for M&B, they are up against the supermarket, the local shop, the meal deal, people having barbecues and people making the most of their outside space in their own gardens, everything that we've heard, but that plays hugely into people's decision-making when it comes to do we go out to a All Bar One or a Browns or a Harvester or do we actually probably save money essentially and do it at home and invite our friends over, and that's a huge part. Five years ago, we didn't consider that as a competitor. We wouldn't consider Tesco as a competitor. Now they are in terms of the choice people have to make when it comes to entertaining and going out letting their hair down.

[00:06:24] How macro-driven do you think the shift in consumer behaviour is? Is it a structural trend towards supermarkets, at-home meals and cheaper day- or evening-out options, or could it reverse once macroeconomic conditions improve?

AB [00:06:46]: That's interesting. Well, I want it to, but I think everybody is going after a smaller market, aren't they? You're right in terms of occasion. I think that's the interesting bit now our guests now have a wider range of choice, so if it's a birthday celebration or some sort of life event, then I think people are more likely to choose a M&B, one of the M&B brands for that celebration. I'll give the example, I always give the example when I had the conversation with colleagues or others that I use Harvester actually as a benchmark because I know the brand really quite well, and Harvester used to be a brand where you could just pop out for lunch or pop out for, oh, actually let's go and grab a Harvester for a quick evening meal instead of just cook at home now because of price and price is a huge factor here. Harvester is now, in my view, a treat. You'd go to Harvester for a life event, a celebratory thing rather than just popping out because you don't want to cook, so you made that choice of actually yes, I will book because it's my son's 21st, we've got a Harvester. Actually, tonight, because it's just a normal Monday night or normal Wednesday night, we'll stay indoors and cook at home. I think the occasion is really key and people will now think a lot more acutely about where they're going to eat on any given night.

[00:08:28] How strong do you think M&B's [Mitchells & Butlers'] portfolio diversification remains in the face of broader market shifts? How exposed is the company to these shifts vs competitors, given its portfolio breadth?

AB [00:08:50]: Well, that's a really good question, and I've actually in front of me all the M&B brands printed out by logo, just I just kind of remind myself a little bit because there's a couple of new ones in there since my time, obviously, I'm aware because I'm in the industry. A lot of M&B brands, I won't call them premium because that would be untrue, but I don't see the breadth in brand in terms of whether it's kind of mid-market, lower market, high market, so they've got a lot of brands where you got to dig deep a little bit and pay a premium price. I'll use Harvester as an example, again, Harvester once was a… Not certainly not value, but it was a brand you could afford to go to. Now you need to think twice, a guest would you think twice or they can afford to go to Harvester. What M&B do not have, in my opinion, is brands that are lower in value vs their competitors. Yes, there's not a lot of brands you can step down to. You take Stonehouse Pizza & Carvery or Sizzling Pub & Grill, which would be the two of the sort of lower value brands. Yes, you'd be hard pushed to find one of those certainly where I live on the south coast, it'd be hard pushed to find one that's easy to get to, so they've got a lot of brands where a guest would think, that's quite pricey, that's quite premium and not many brands that are low in value where people want to step down in terms of what they're paying for a quick buy to eat.

[00:10:30] To what extent do you imagine M&B's lack of budget-friendly brands is more of a deliberate strategy vs Harvester and other brands being left behind?

AB [00:10:45]: Again, good question. I think that's just where they found themselves in. I mean some of the brands have obviously developed are strategic, and when you look at whether it be Pesto Great Italian or Ego, etc, they're obviously strategic, and that's probably based on location as well, where they placed those particular brands, whether it be big shopping centres, high street, etc, but you look at a lot of the brands that M&B have got are brands that have been around for a number of years. I mean you look at Toby Carvery, that's probably the oldest brand they've got, and that's what, 30-plus years old, Harvester as well, even brands like Nicholson's and O'Neill's, they're established brands. Over time, they've obviously just gone up in price by default more than anything else because that's what companies have had to do to essentially make money. What they haven't done, in my view, is then introduce or create brands that will capture the lower value or that mid-market. The focus on brands that they've got established brands essentially that over time have become quite…

You look so Vintage Inns is a great example as well. They're essentially a pub, great, really a good pub brand, a country pub brand, a village pub brand. You think, well, that should be fairly price reasonable, but actually, to the average person, and the Vintage Inns is quite expensive. Of course, again, this boils that location as well where pubs are situated, and that's I think it's key to M&B's not strategy, but a lot of their businesses are near big towns or in city centres, in big shopping centres, and that will obviously drive their strategy in terms of how they develop those brands or what brands they create.

[00:12:38] You've spoken about underestimation of weather’s potential impacts on trading. M&B's brands such as Toby Carvery and Miller & Carter suffered over the past few quarters. To what extent do you think that is wholly attributable to the bad weather? Are there any cracks in the brand experience or brand equity that might explain this?

AB [00:13:19]: Yes, it's a really good question, and you picked on the brand, which is interesting in terms of Toby Carvery. Toby Carvery, because it's a carvery, it's a roast and the guest has got a really hot carving deck. When the sun shines, Toby Carvery suffer. They suffer hugely, and if the weather is vs last year is hotter than that week or that day last year, then the sales will suffer. The other part of any brand is consistency as well, and that will be the same for Miller & Carter or for Toby Carvery. If they can't deliver a consistent sort of plate of food or carving deck, then that will also play into how well or how consistent their sales numbers are for that particular part of that period of time.

AD [00:14:28]: Toby Carvery and Miller & Carter are especially exposed and you have no wider concerns.

AB [00:14:38]: I think it's the same for any restaurant where sunshine and you've got to sit inside and have a hot plate of food, that the weather will absolutely impact. I mean Miller & Carter is still a brand for M&B that they are growing and there's a new one, just actually a Harvester conversion happening near me, so it's still a brand they're developing. I'm not sure they're growing it on scale, but certainly, it's a brand they're investing money, but yes, they will be impacted by the weather, but also by reputation. I mean that's a massive thing. Miller & Carter or Toby Carvery or any of these brands, but reputation of the brand, but reputation of the individual restaurant as well, as we know, so whether you measure that by Google or Tripadvisor or just local word of mouth, the obviously, a guest's view of that restaurant would play factors in that as well.

AD [00:15:40]: You mentioned reputation there. Have you observed any deterioration or discourse around any brands in particular?

AB [00:15:51]: Again, and this is more anecdotal than from what I hear in terms of just, I guess, probably more locally. Certainly, I think Harvester, even going back to when I was associated with that brand, always struggle with consistency, and whether that be the quality of the salads and the salad cart or not so much, but certainly, that presentation of the food, the quality of the food, and that would include temperature. It would also include speed of delivery, so how long it takes for that plate of food to leave the kitchen and arrive at the table. Certainly, Harvester has been one of those brands because it's not complicated, but it's got a few more complexities to it than, say, other brands. I think All Bar One as well, I think just purely based on the fact it's obviously more cocktails. The food is probably a bit more complex as well, and it's a bit more high profile, All Bar One brand whenever you read about M&B in the papers, it's always All Bar One as referred to, and they certainly struggled with consistency over the years as well.

[00:17:08] Given the environment you have outlined, we have started to hear more about promotions manifesting in the industry in more prolonged stints than previously. How concerned are you about current promotional activity in the industry? How have key M&B brands approached this?

AB [00:17:38]: Well, again, good question. If you ask anyone in the industry who's been around for as long as I have, you'll also see the story of PizzaExpress and how reliant PizzaExpress became on discounting, and they were really one of the first brands to go like all full on in terms of promotions and discounting and they were doing essentially two for one, so 50% off for a long period of time. A lot of us put that those reasons down to the fact that PizzaExpress has struggled in recent years because they became too reliant on discounting, and that's the risk. The risk is that you become too reliant on discounting. What M&B is very good at, to be fair to them, and we see this in certainly Vintage Inns and Harvester's, even Miller & Carter and other brands, less so probably maybe Browns, but is they can switch on discounting really quite quickly, so if they see a dip in sales or suddenly the suns come out, they can switch on discounting to tie into what's going on currently, whether it be sort of economy or weather or whatever has occurred, they're very clever at being able to switch on.

You've got a question further down about technology, but their technology supports that through the app, etc, so they're able to be really quite clever with their discounting, and I think, again, you mentioned app as I just went to app, but you mentioned app as well. The app will play into this, so their app, which has been established for a long while, will probably, over time, sort of take control more of promotions than just M&B just sending out round of promotions as and when they need to based on what's going on in any given week.

AD [00:19:29]: M&B's app and data sophistication could drive more targeted promotions and offset any brand dilution risks from broad-based promotions. Is that correct?

AB [00:19:41]: Correct. Absolutely. Yes, I can't see that changing in the short period of time because that's part of what we do as part of what a lot of industries do, supermarkets have been doing this for decades, and we're kind of late to the party in that regard. Although we've always had discounts out there. Certainly, I say this again, since COVID, we've probably come a bit more reliant on them and M&B certainly have become a lot more reliant on them and the point of discount is obviously to say you stand out and you steal that guest from a competitor, you want to attract that guest in by giving them an offer or at that point I made a minute ago around, should we go to get a meal deal from Marks & Spencer or Tesco or actually… Oh no, an offer just popped up my phone, do you know what? I've got this, so you get 25% off, I know at Miller & Carter or O'Neill's, actually let's go out instead, so they will always play a part, and I think they will just become more tactical as we move forward.

AD [00:20:54]: Looking at that on an individual operator or pubco brand level and the promotional environment more broadly, you do not see material risks in dilution of the pub industry or more price wars going forwards, or structural risks for the industry as a whole from prolonged and intensive discounting. Would you agree?

AB [00:21:25]: We're probably partway there. I mean discounting is not a new thing, as I said. It's become more prevalent in the last five years, certainly, and you can see that. Again, I'll see that through the M&B brands I follow, I know about. I mean, risk moving forward, yes, but that will depend to your point on what further cost headwinds come our way and how tactically we use discounting, which is why I think M&B will start to move away from this just sending discounts to databases and online discounts to more tactical discounts that will actually work to draw in new guests into the marketplace because that's ultimately the risk of discount that you discount people that are already going to come and eat with you anyway. What needs to be better at, sort of what M&B needs better at is attracting new users into their brands by clever promotions that will actually attract the new guests in. It doesn't necessarily mean that they then pay less when they're in pub or in restaurant you want to draw that guest in by saying, well, there's 25% off, whatever it is, tactically, but then once you're in your Harvester, then you want to start selling to them sell, sell, sell.

It needs to be a rounded or across the company, operations need to work with marketing to ensure that everyone's got their parts to play in this. Marketing draw the guests in and then operations right, we need to make sure we are selling frankly, as much as we can do to these guests now they're in our businesses.

[00:23:16] M&B's like-for-like sales growth slowed down from Q1 FY26 to Q3 FY26. How do you think this could have played out in Q4 FY26, ie, July-October 2026? What is possible for the company across the winter months and into 2027?

AB [00:23:49]: Yes, absolutely. At this point in the year now, obviously post summertime, everyone is kind of reset, the kids have gone back to school, everyone's gone back to work. These months are always quieter for M&B. No doubt, we'll start to see back to the question a minute ago, more promotions discounting creep in to remind guests that these brands are still here. Over the next couple of months, things will tick over. There still are headwinds that will give guests or potential guests choice and questions over what they do with their money and where they spend it, and that's not going to change. I think, I personally believe we'll still see some marginal decline over the next couple of months before Christmas kicks in. Then frankly, Christmas time is all to play for, and M&B have got a great portfolio of brands. Fortunately, that they are brands where, yes, actually, you'd quite happily go and spend a Christmas celebration at because they're a bit special or that they would attract those kind of users, so the M&B right now should be absolutely making sure they're preparing themselves for Christmas time. As you know, Christmas starts early, doesn't it? I'm not entirely sure when the Christmas menus are starting in M&B, but no doubt it's probably early November. Essentially, certainly, I guess it's wide across the industry, but Christmas will start, it will be almost a 6-7-week period of time. All preparation right now should be going to ensure we just keep costs low over the next couple of months, keep things as tight as possible, use promotions tactfully and then ensure we're set up for Christmas.

[00:25:50] Given what we've discussed around M&B, its brands and the shifting environment, would you expect the company to grow in line or outperform the market over the coming 6-12 months?

AB [00:26:07]: Yes. Look, the good thing about M&B is they've got a wide portfolio of brands, and even though as I said earlier, they do not have a huge amount of value brands, which I think is an area of weakness. They still have a good selection of brands. They're all well-known brands. They're pretty much in good locations, so as long as those brands focus on what is core to those brands, what is their brand strategy, I think M&B will continue to be in line with the market.

[00:26:47] To what extent do you think that M&B's ongoing Ignite strategy and philosophy is the right one to mitigate and manage headwinds in the industry? Does this fully address the pressures or unlock the potential of the company, or are there any shifts that you would recommend?

AB [00:27:12]: I don't know how long it's going on for. Normally with any strategy, you'd review it after about five years. Ignite, I'm not entirely sure how long it's been going on for, but certainly, if we're approaching the five-year mark, which we're probably getting close to, then that strategy needs to be reviewed as it would be anyway, they review every year to ensure it's doing the right thing and given the right output, but as time moves on, again, approaching the five-year mark or if we could pass it, that strategy should be totally pulled apart and relooked at and to ensure it's delivering. I mean again, it's only my point of view, but from an M&B point of view, it must be doing something because obviously, they're working to it, and that for them is about ensuring that the brands are relevant, isn't it and that the brands remains kind of well known in the marketplace, so it'd be interesting to see what they do with it. I think for M&B currently, they obviously believe it's the right strategy, but as I said, it will need to be reviewed, I would have thought quite soon.

AD [00:28:24]: Is there anything that you think the company is missing a trick on that could internally drive improvements or resilience in the coming environment?

AB [00:28:37]: No, I think I've covered it already. I think they just need to understand where their brand portfolios kind of fit in the current market, and this is really relevant that as people have less money to spend, they need to then consider what brands they've got that will draw in people that want to spend less, more value brands. We've also got challenges around what people's diets and what people want to eat when they go out. We know we've got a lot of people currently in the country that are using certain medication to help weight loss, that kind of thing, and that still has to play into our strategy in terms of what we offer in our brands, and that's certainly starting to become a bit more vocalised. Allergies, again, a massive part of this, so how the brands sort of menus and offers adapt to guests who've got sort of additional needs when it comes to diet is absolutely a big factor as well.

[00:29:49] Given M&B's broader group organisation, but with the pubs and restaurants themselves being mainly managed, how sophisticated is the company's labour management approach, cultural appeal and staff retention? Where could it improve?

AB [00:30:17]: Well, I know M&B will be looking at when it comes to costs. Let's break that down a little bit, so and this is the same for every company in our industry, that M&B would have been hit by last… The budget before, the NI hike, obviously, national living wage hike. There's two absolute cost factors there that the companies and essentially the pubs or the restaurants will have to absorb, which means they've got to run more efficiently to try and keep that profit number up to shareholders' expectation, so efficiencies are part of it. I think the whole of the industry, and I know M&B for a fact will certainly struggle to recruit more so than before. Probably less so team members because an 18-year-old anyone, but certainly, someone who just left school, etc, and want a part-time job, it's still quite an attractive job because it's fun, etc. I think where we'll struggle now is to get those key roles, so the management roles, whether it be kitchen manager or general manager, etc, making it attractive to them is going to be harder because it's a hard job. You've got to do it with less labour budget than we ever had.

The model M&B use to essentially support the managers in generating rosters is as good as any other company's model. The bottom line is they are dictated by how much money they've got to spend on labour in each of the businesses, and we all know that's because of all the factors we hear about regularly through the media, the cost has increased, and that puts pressure on companies at M&B to deliver profit while trying to maintain service, and that's the biggest challenge. We've got less money to spend on labour, but we still need to deliver great service to maintain that reputation for all the brands that M&B have got.

[00:32:38] How intense could the fight over top-quality managers become? Is that becoming more acute in the industry? How could that play out from a competitive standpoint?

AB [00:32:56]: I think M&B have always done well is develop. Apologies what M&B have done well and need to continue doing is operate attractive management programmes, development schemes, graduate schemes, which I know they do and have done very well for years, in-house training programmes, etc, and actually, what M&B are good at and needs to do more of is develop their own managers from within rather than attract. I say this regularly, why would a decent manager leave one company come to run a Harvester if they're already a great manager on a good package, they've got no incentive to leave unless they particularly want to come work for M&B in that particular brand, sometimes location. M&B must maintain and develop, evolve their internal management training programme to ensure that actually the manager, they want to appoint to the next vacancy and All Bar One or Browns is someone that developed from within, as I did. I started as a part-time barman and develop my way through, and they must do more of that and continue to do that to ensure they just create their own pool of managers, so they're not then struggling if a big vacancy comes up.

AD [00:34:25]: That's a strength of M&B in terms of processes that it can double down on, put a bit more resources in and that could drive efficiencies because it is not having to approach people going forwards. Is that correct?

AB [00:34:38]: Yes, and we've said for years, I'm saying M&B to employ even a team member, but to employ a manager externally to train them up in your processes in the brand, etc, it costs money, probably, I'm going to throw a number out, GBP 5,000 at least, I'd imagine for a general manager. If you're doing that all the time, it may be hidden cost, but it's still cost that's come off different parts of the P&L. It's imperative that M&B continue and again, grow, evolve their in-house training management programmes, etc, to ensure that, that is an area that they can less of a worry. They can just appoint internally what they have to recruit.

[00:35:32] How industry-leading has M&B's tech implementation been so far? Where do you think tech could go within the industry in the mid-term? What are the company's main opportunities from a cost or growth standpoint?

AB [00:36:00]: Yes. I consider them this is my personal opinion, I consider them to be leading. I mean, 20 years ago, they had to play catch up pretty quickly. I remember working with M&B before they even had a website, but that was the turnaround pretty quickly when they realised that was the way forward. I think since then, they've invested a lot of money in systems like table management systems, kitchen management systems, which is the systems we use M&B use to support bookings and delivery of food. These could be systems that help generate orders, systems that help generate just managed process, whether it be food safety, legal, etc. They've done a lot. The improvements will come through AI, definitely, and that's certainly creeping in now. There will be new systems that are better than the previous system, so upgrades will be required. We said the app, the app is the obvious one in terms of driving in creating loyalty and bringing new guests into the business. I'm sure there will be lots of changes to the app and clever little tricks in the app that will help it do that.

Again, AI will play its part with the app, I'm sure it will learn it will start to learn you start to learn what people want, what their needs are and start to support in that way, but tech has been, is and will always be a way of helping with efficiencies. Without question, helping drive sales and helping us maintain safe and legal as well, which is a huge part of what we have to do because we deliver food and drink to people. Yes, it's certainly not finished, and there'll be a lot more that M&B will be looking at from a tech point of view.

[00:38:03] Given the current state of the industry and everything that we've discussed around top-line efficiencies and business rate cuts coming through, what scope do you see for maintaining or improving profit margins in the mid-term and seeing recovery, or is it going to be a fight to maintain what it has for the company?

AB [00:38:31]: Yes. M&B, they're trying to attract into their portfolios, the same people every other company is, and they need to stand out to do that, and that's the ongoing challenge. I say that's driven through brand recognition, which they've got, but also consistency in that brand, which they need to certainly continue to work on, but I think we all know that those cost headwinds aren't reducing anytime soon, and that will always be a factor. The other thing we haven't spoken about really as well is future guests, and when I say future guests, I'm talking about guests who are currently my kids age who are at school age currently, but even young adults now are drinking less, eating out less and future, future, there are not just cost headwinds, but there are future guest wins as well in terms of who we attract into the pubs in the future when the attraction for some younger adults to eat out or go and have a drink in an All Bar One is less so than it ever was before. It's not just about cost factors and headwinds. I believe that's part of it as well.

[00:39:56] How does the shifting consumer base translate into M&B's marketing and CAPEX intensity to keep things up to date? Do you expect those to inflate over time to capture these new audiences?

AB [00:40:11]: That certainly has to be, but it depends on the brand. This is the point, isn't it? I keep using a Harvester as an example, but excuse me, it's in front of me. The good thing about M&B brands, and this is the one thing that is a real strength to Mitchells & Butlers, is they've got brands that pretty much suit every occasion. Again, I mentioned value probably needs to be a part to look into more, but in the main, they've got brands that suit every occasion, whether it be family, drink, early evening drink, late drink, celebration, etc, or Sunday carvery. That's a great strength. Normally, we mentioned weather earlier, if one brand is struggling because Toby Carvery is struggling because the sun is out, then hopefully, a Vintage Inn with nice garden is doing quite well, etc, etc. That's a real strength for them. Their marketing must continue to support the brand's own strategies and guest profile essentially. That is continuing.

I don't see a lot of marketing at the moment aimed at younger, newer guests, again, unless that brand dictates that's the kind of guests they're looking for. That may be the Castle brand in London definitely would be going for probably a younger crowd, maybe one, but probably not the other brands aren't really designed to attract a younger adult. That also plays into it. I don't see a lot of marketing aimed at that group, and it's something I see and know and you hear in media, that that group are certainly eating and drinking less.

AD [00:42:01]: Even if the brand is not perfectly set up for the younger audience, it needs to start thinking about it…

AB [00:42:10]: Yes, definitely, it's my view, yes.

[00:42:13] What approach would you take for Harvester going forward in terms of refresh or further conversions to Miller & Carter, etc? Does the brand fundamentally still work? Touching on Harvester, are there any other brands that should be in this conversation?

AB [00:42:45]: You said to me, you wrote in your notes, Toby Carvery. These essentially are the older brands. They're the oldest brands M&B have, Harvester and Toby Carvery, as we said earlier. I think Harvester has probably gone a bit too premium in terms of price. Again, I know that speaking to people I know who used to eat at Harvester won't now if it's just cost… I'll give you my example, last when I ate at Harvester with my family. We had a Kids Eat for GBP 1 voucher. Both my children ate off the menu, but we didn't read the small print where it was actually only certain dishes on the kids menu. This was a random Wednesday night because my daughter fancied this À la carte, and we ended up paying close to GBP 100 for four of us to eat out.

That's what we call bill shock in the industry, and that was bill shock because I was expecting to pay probably half of that and then ended up paying a bill that was, in my mind at the time, a lot for a Wednesday night popping out to eat, was back to my point from earlier. That's certainly an area they look at, but that they'll only be able to drive cost down by looking at (audio distorts 43.56) they're putting on the plate. If a particular chicken product or steak product or pasta product, whatever it is, fish products, if they're paying more for that product, then that cost will flow through to the customer. I think certainly, I say cost savings, but efficiency savings in terms of cost on the menu of Harvester certainly is a thing, but yes, I think Harvester… They're well-known brands. They've got on their side, but yes, they are quite long in the tooth. We're forever seeing brands around me that we know, Beefeater, Brewers Fayre, but certainly Beefeater now basically closed across the board, and that's an old brand.

It's been around for as long as Harvester. I think there's risk with Harvester because of the age of the brand. As I said already, we want to attract younger guests. I think there's a risk there in terms of how they do evolve. How they evolve is a really good question. It's got to continue to attract the family group, which it won't do based on current price, but some clever marketing. Toby Carvery, I think it's fortunate that it's all about the roast dinner, isn't it? Fortunately, the roast dinner is still a massive thing in the UK. It's not a dying market, particularly, and lots of families, less so than before, I'm sure, but lots of families still want to have a Sunday roast, especially on a cold Sunday. I think despite that brand being (inaudible 45.31), I think it's quite… It's got good heritage, Toby Carvery. Certainly, the one near me is still exceptionally busy. The risk, obviously, is always with brands not evolving and not keeping up with current trends, etc. I see Harvester more of a risk than I do Toby Carvery, funny enough.

[00:45:54] If you see a heritage brand such as Harvester that has been moved away from its value perception before, not hitting the right trends at present, how confident are you that it could it be revitalised in an environment with many emerging players and a lot of winners and losers? Is it becoming more difficult to revitalise these brands going forwards?

AB [00:46:26]: I think it is when you've got as many brands as M&B do have actually because you can get to the point you've got too many brands and then what does each brand stand for? Why is one brand different to the next brand? I think that's definitely… That must be an ongoing challenge for M&B. Actually, to be fair, when I went on the website earlier today and I printed off all the brands they've got, I'd forgotten how many they actually have and there's some new ones, as you mentioned, the Ego in your e-mail and Pesto. I think the number of brands would be a concern for me actually from point of view because how does one brand differ, as I said already, but I think if you've got brands that are established and well-known, everyone's heard of a Harvester. That's the strength of that brand. It's a name that everyone's heard of. They've just got to use market research, again, keep on top of current trends to ensure they keep that brand relevant in the forthcoming years.

AD [00:47:26]: Are there any segments of the portfolio where you see particular saturation or where there have been structural declines? I'm thinking maybe city bars or late-night events. How should this impact M&B's portfolio strategy?

AB [00:47:50]: No, exactly that.

AD [00:47:51]: Are there any places you would look to rationalise in particular?

AB [00:47:57]: To your point, I think the high street pub is the city pubs have done all by themselves. Probably not that area. I'm looking at the brands now sat in front of me. It's a hard thing to make because obviously, they're still expanding Miller & Carter. They wouldn't be doing that unless they felt there was a real demand for that. No, actually, I don't see huge saturation because actually knowing where most of these brands sit, frankly, it's not a market that's saturated anymore through closures across, not necessarily M&B, fortunately, but certainly other companies, independents, there's restaurants and pubs closing down regularly. I think that alone helps dilute the market, which enables M&B to step into that void. As I said, they've got a wide spectrum of brands, which can be an Achilles heel when you may be trying to differentiate what they are, but certainly, equally to that, most of the brands can slot into the market. No, actually, I don't see any brands that probably currently oversaturate the market. The beauty of what they do, as you said already and I said already, again, if a particular Harvester is not working in that location anymore because the guest portfolio has changed locally, etc, etc, then you just convert it into another brand and that's the beauty with M&B.

[00:49:37] What main growth opportunities do you see within M&B's portfolio – whether optimising individual brands, driving expansion conversions to Miller & Carter or new brands such as Pesto and Ego or bringing in new brands and formats to meet untapped segments?

AB [00:50:00]: One, it depends on where each of these particular brands and restaurants sit in terms of their local economy and market. Certainly, if it was me, I'd be looking at, and I've said this already, brands like Sizzling Pub & Grill, as in they're definitely lower value. Is there room to grow those? Maybe even Ember in terms of their… I know where they sit, they are mid-market. There's certainly growth in those two brands. Miller & Carter has developed itself a really strong name. Again, being that's a brand that M&B only developed, I want to say, about 24 years ago, for that to be probably as well-known as Harvester is now. That's a real success story. That's definitely a brand they will continue to grow. In the city locations, Nicholson's because it's a brand close to my heart, was always a strong brand. Certainly, within city market, is there room to grow that brand because it's a well-known brand? Castle is not a brand as in you would know a Castle pub as a Castle pub, whereas Nicholson's you would do.

Certainly room to grow that. I think brands at risk, O'Neill's, it's a brand I love, but I think certainly it's a brand that's probably at risk because of what it is, which is essentially a big drinking environment. Then, I think All Bar One again, it's one of those brands, which is, it's well-known. Again, it's not the one you hear. It's well-known in terms of, it's the one you read about in the media, but equally, it's less well-known if you don't live in a city. There's probably room to push that brand because it's still a well-established brand for M&B.

[00:51:54] How would you push All Bar One going forwards?

AB [00:52:03]: We'd have to look at all the locations of every single business they've got and see if there's any that will naturally convert into an All Bar One. I'm not privy to what M&B are looking at in terms of acquisitions. There's always I think the beauty… I'm not sure how much they're willing to invest at the moment, what the appetite is like, but there will always be businesses out there that, frankly, M&B can buy or I know M&B look at. They've got a lot of leasehold properties at the moment rather than own outright, but there's certainly room to grow the brand through acquisition as well if the appetite is there, but yes, there will also definitely be businesses within their own portfolio they could convert if the location is right. Again, beauty of what they do.

[00:52:58] You've spoken about a lot of closures or rationalisation in the industry recently. To what extent would you expect that to continue in the mid-term? What supply-demand dynamics could you see? What role could M&B play in terms of driving single- or multi-site group acquisitions forwards?

AB [00:53:27]: M&B's role in this is to ensure they stay relevant, is to ensure they continue to attract new guests and ensure their brands evolve as they should do. M&B will be lucky because they are a sizeable company in the industry. They will be able to push back some cost headwinds through price negotiation, whether it be on their utilities or certainly through food and drink. I'd expect M&B to continue to be stable in what is a tough market. I think what we are seeing really is where companies (inaudible 54.03) Whitbread. It's a great example is that they put all the eggs into Premier Inn a number of years ago. It was inevitable at some point in time that Beefeater and Brewers Fayre would just disappear because it just wasn't in their strategy. Then, we kept those businesses because of location, and I guess, just, again, strategy in terms of moving them on. Then, frankly, where we're seeing a lot of other closures in the market is independents. For an independent business person to run one restaurant or pub is now impossible. You need that strength of a big company like M&B behind you to enable… To cope with the cost winds [headwinds].

[00:54:53] We spoke about M&B's performance over the coming year in line with the market. For a company that has been used to driving outperformance over the last few years, what do you think will determine success in the longer term in outgrowing the UK pub and restaurant industry? How confident would you be in its longer-term outlook?

AB [00:55:28]: Confident because I've known M&B, as I said, over 30 years now and that purely based on my own instincts and experience with them, they've ridden many storms over the years, the financial crisis, hedge funds and the rest of it back in the day. They are a company that are willing to evolve. As I said, I think I said to a colleague the other week, Phil Urban, the CEO, is a solid CEO. He's well-established. He's been with M&B for a number of years now and seems to have good control and focus and strategy with the company. I would have every confidence with M&B. I think they'll be happy, from a sales point of view, to be on par with their competitors. Every company wants to be beating their competitors, but I think in the current climate, if I was Phil Urban, as long as I was in line with my competitor set and not in decline or behind my competitor set, which is a measure, isn't it?

Then, yes, that for me would be not overall success, but certainly demonstrate we're doing a great job, but that said, with all the brands they've got in M&B, there's no reason at all where with good focus using everything we've spoken about already, there's no reason at all where they can't over-index and really drive some of these brands further to they do now with consistency in mind, then there's every opportunity that M&B could come out winning in the market in years to come.

[00:57:06] Is there anything else that you think is important to mention around mid-to-long-term disruption risks for M&B or incremental opportunities, in the UK or dipping a toe in Germany, for instance?

AB [00:57:27]: No, I think I always thought it was a shame when they stepped away from hotels. I know they've got Innkeeper's Lodge or Innkeeper's Collection, but I think they did that because they decided to focus on being great at one thing rather than others, but they still got Innkeeper's. Is there an opportunity to open more bedrooms in businesses? It's one small area, but it's never going to be a huge strategy for M&B. I've mentioned value already, so that needs to go there again. That's certainly part of it. No, I think nothing more than we said. It's just making sure that the brands they've got to stay relevant and use their brand prowess to continue to keep existing loyal guests and attract new ones in.

AD [00:58:26]: Thank you.

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