Mitchells & Butlers plc · LSE:MAB
Mitchells & Butlers — Investor Presentation (March 2004)
40 slides from Mitchells & Butlers's investor presentation, March 2004
Slide 1: Sales Strategy
Sales Strategy Tim Clarke March 2004 Sales Strategy Seminar March 2004 1
Slide 2: Introduction
Introduction Aim of this afternoon: z Add colour to our sales strategy Content: z Presentation by Adam Martin z Trade visits z No new trading information Sales Strategy Seminar March 2004 2
Slide 3: MAB Sales Strategy - Background
MAB Sales Strategy - Background z Market Led Consumer Trends Buying Behaviour Competitive Dynamics z Value and amenity approach is most profitable strategy Tailored to each segment z Iterative process through trial and evaluation Capital and labour intensive business High gross margin st
Slide 4: Market Context
Market Context Consumer expenditure £m CAGR (Actual) 1982 to 2003 70000 Total 7.4%* 60000 Growth in Eating Out driven by: 50000 9.4% High income elasticity 40000 Eating Out Life Style Changes 30000 Eating Out* Value offers 20000 Wine & Cider Spirits 5.8% Drinking 10000 Out Beer 0 1982 1985 198
Slide 5: MAB Sales Evolution
MAB Sales Evolution Sales = £0.9bn* Sales = £1.5bn No of pubs: 2,635 No of pubs: 2,047 Soft Other Packaged Accommodation Drinks 1% Accomodation Other 1% 3% Beer 3% 3% 4% Machines Machines 5% 7% Food 11% Draught Beer Food 31% 29% Wines & 1994 2003 Spirits Draught 8% Beer 65% PPL 4% PPS Soft 4% Drinks
Slide 6: Market & Competitive Dynamics
Market & Competitive Dynamics z Attractive demographic trends 45+ year olds forecast to grow by 6% in next 5 years z New supply falling sharply Expansionary capex now c.1/3 1999 peak levels Maintenance falling behind depreciation Industry capital employed no longer growing z Two distinct mar
Slide 7: MAB Strategy
MAB Strategy Sales Generating Growing Sales Driving Actions Volumes Returns z Control trials z Range z Enhancing asset z Growing cash productivity z Price gross profits z Mitigating external z Marketing z Mix enhancement costs z Service z Productivity z Defending improvements z Amenity operating mar
Slide 8: Sales Strategy
Sales Strategy Adam Martin – Marketing Director March 2004 Sales Strategy Seminar March 2004 8
Slide 9: MAB Sales Strategy – Recent Evolution
MAB Sales Strategy – Recent Evolution z “We intend to reinvest c.1% of gross margin on a controlled basis to drive sales” Prelims 2002 z “We have been carrying out a series of controlled pricing and promotional trials across the 1st half, initially in c.100 outlets, now in c.1000 pubs… The balance o
Slide 10: Agenda
Agenda z Results to date z Approach and Examples z Outputs: Mix and Price z Appraisal and Evaluation z Conclusions Sales Strategy Seminar March 2004 10
Slide 11: Introduction
Introduction z Focus is one of profitable volume growth Operating cost inflation higher than consumer price inflation Profit growth best supported by cash generative volume growth Volume growth from market share steal and recruitment of new customers z Volume growth is delivered through a numb
Slide 12: Sales Strategy: Key Measures
Sales Strategy : Key Measures Customer Satisfaction Financial Performance Mystery Guest Scores Like for Like Sales Growth Market Share Gains Like for Like GP Growth Sales Strategy Seminar March 2004 12
Slide 13: Market Share
Market Share Mitchells & Butlers Beer Volume Growth vs Market 6% 5% 4% 3% 2% 1% Market 0% - 1% MAB - 2% - 3% MAT to Feb 04 Qtr to Feb 04 Source: BBPA Sales Strategy Seminar March 2004 13
Slide 14: Like for Like Sales Growth
Like for Like Sales Growth 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% - 1.0% - 2.0% - 3.0% - 4.0% Q2 2002/3* Q3 2002/3* Q4 2002/3 Q1 2003/4** P5-8 P9-10 P10-11 P1-4 For 1st 18 weeks of 2004: SAME OUTLET LIKE FOR LIKE SALES Same outlet like for like sales population includes c.93% of the estate Uninvested li
Slide 15: Agenda
Agenda z Results to date z Approach and Examples z Outputs: Mix and Price z Appraisal and Evaluation z Conclusions Sales Strategy Seminar March 2004 15
Slide 16: Consumer Price Elasticity
Consumer Behaviour A function of Consumer Price Elasticity & Ease of Switching: Hi Consumer Price Elasticity Lo Lo Ease of Switching Hi The Price/ Volume Relationship varies by occasion / location Sales Strategy Seminar March 2004 16
Slide 17: Consumer Price Elasticity
Consumer Behaviour Occasion: Quiet Drink/ Quick Bite Hi Location: Local Example: “Nothing on the telly” “I couldn’t be bothered to cook” Consumer Price Elasticity Action: Provide a reason to visit. Excellent amenity, fair drinks & keen food prices Lo Lo Ease of Switching Hi Sales Strategy Seminar Ma
Slide 18: Ember Cask Ale Festival
…Ember Cask Ale Festival z Aim: attract new, and please existing, customers by associating the pub and Ember Inns with… Increased premium choice Expertise in cask ale The position of “local hero” z Mechanic… Pub Manager chose range of ales that changed on weekly basis All Ember pubs partic
Slide 19: Toby Carvery sandwich & wine
…Toby Carvery sandwich & wine z Aim: Encourage increased frequency of visit by existing customers during summer period Raise profile of Toby Carvery Sandwich as a light alternative to a full roast z Mechanic: Free glass of wine with Carvery sandwich @ £3.75 Promotional vouchers available in
Slide 20: Consumer Price Elasticity
Consumer Behaviour Hi Occasion: Quiet Drink Location: City Centre Example: “swift drink after work” Consumer Price Elasticity Action: Range extension & innovation Keen prices on staples Lo Lo Ease of Switching Hi Sales Strategy Seminar March 2004 20
Slide 21: Draught beer range in a segment of London Pubs
Draught beer range in a segment of London Pubs z Aim: To drive volume and cash gross profit z Mechanic: Addition of ScotCo range to existing Coors and C-T range Change in pricing eg: Before: Draught beer range in London pub estate Carlsberg £2.50 Grolsch £2.60 Guinness £2.65 Now: Carlsberg
Slide 22: All Bar One refresh
...All Bar One refresh z Re-emphasise continental bar brasserie elements Extended range of super premium Continental beers Properly dispensed, right glassware, right temperature z Update amenity experience More varied furniture, better sound systems, softer lighting z All within brand maintena
Slide 23: Consumer Price Elasticity
Consumer Behaviour Hi Consumer Price Elasticity Occasion: Celebration Location: City Centre Example: “O’Neill’s Rugby World Cup” Action: Attract and hold Lo Lo Ease of Switching Hi Sales Strategy Seminar March 2004 23
Slide 24: O'Neill's rugby world cup
“O’Neill’s rugby world cup” z L.U. and in-pub advertising z Strong promotional mechanics z Volume, sales, GP growth z Strengthened O’Neills reputation for Rugby and sports occasions O’Neills Bromley Sales Strategy Seminar March 2004 24
Slide 25: Consumer Price Elasticity
Consumer Behaviour A function of Consumer Price Elasticity & Ease of Switching: Hi Consumer Price Elasticity Occasion: Celebration Location: Local Example: “Toby Sunday Lunch” Action: Market the attraction Lo Lo Ease of Switching Hi The Price/ Volume Relationship varies by occasion / location Sales
Slide 26: Toby Sunday Lunch
“Toby Sunday Lunch” z £7.99 z Average Sunday: 62,000 covers 6x’s cover turn z Special Sunday (eg: Mothers Day): 75,000 covers 7x’s cover turn 11.8x’s top performing Toby Sales Strategy Seminar March 2004 26
Slide 27: Agenda
Agenda z Results to date z Approach and Examples z Outputs: Mix and Price z Appraisal and Evaluation z Conclusions Sales Strategy Seminar March 2004 27
Slide 28: The Outputs - Mix
The Outputs - Mix Year on year price change influenced by mix: z Sales / income mix e.g. drink / food z Category mix e.g. lager within drink z Product mix e.g. Stella within lager z Service size mix e.g. half pint / pint z Estate mix e.g. Ember / O’Neills z Geographic e.g. North/ South Active yield
Slide 29: Competitive Context – Managed
Competitive Context – Managed A Snapshot Average Price (£) of a Pint of Standard Lager Feb 2004 2.80 2.60 2.40 2.20 2.00 £ 1.80 1.60 1.40 1.20 1.00 o l ls k ut n ed d a ce 1 fe a se 8 es s on ity ics rs ds oc an io ea o. as is r3 te bo ei Li ttu oo rM Ba ar rs po ar ut R ss N R Pi 'N Ya sh C Ba ka F
Slide 30: Competitor Context - Residential
Competitor Context - Residential Price of Standard Draught CARLSBERG DEC 01 £2.30 DEC 02 £2.20 DEC 03 £2.10 £2.00 £1.90 £1.80 £1.70 £1.60 £1.50 Lessees Managed Sizzling Pub Arena/Sports Market Co Activity (excl MAB) Source: Lessees - AC Neilsen Retail Audit Data, Managed – AC Neilsen Pub Track Data
Slide 31: Competitor Context - Residential
Competitor Context - Residential Price of Standard Draught CARLING DEC 01 DEC 02 £2.20 DEC 03 £2.10 £2.00 £1.90 £1.80 £1.70 Lessees Managed Sizzling Arena/Sports Ember Taverns Market Pub Co Activity Inns (excl MAB) Source: Lessees - AC Neilsen Retail Audit Data, Managed – AC Neilsen Pub Track Data (
Slide 32: Competitor Context - Lessees
Competitor Context - Lessees Price £ of Standard Draught Carling in Leased/Tenanted Pubs (50+ chain) £2.20 £2.10 £2.00 £1.90 £1.80 £1.70 AUG 01 AUG 02 AUG 03 FEB 02 APR 02 FEB 01 APR 01 OCT 01 OCT 03 AUG 00 APR 03 DEC 03 FEB 03 DEC 01 OCT 02 FEB 00 APR 00 OCT 00 JUN 01 JUN 02 DEC 00 DEC 02 JUN 03 JU
Slide 33: On/Off Trade Relationship
On/ Off Trade Relationship UK Beer Price Index 240 BEER ON-SALES 220 200 180 BEER OFF-SALES 160 140 120 100 80 60 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Data rebased to 100 (1987) Source : Office for National Statistics Sales Strategy Seminar March 2004 33
Slide 34: Agenda
Agenda z Results to date z Approach and Examples z Outputs: Mix and Price z Appraisal and Evaluation z Conclusions Sales Strategy Seminar March 2004 34
Slide 35: Appraisal & Evaluation
Appraisal & Evaluation Implement Set Parameters Evaluate Maintain / enhance z Design & Against parameters Customer Value Proposition & operational Trial z Grow cash gross profits practicalities Refine Closely monitored trial, refinement & review within parameters Sales Strategy Seminar March 2004 35
Slide 36: Agenda
Agenda z Results to date z Approach and Examples z Outputs: Mix and Price z Appraisal and Evaluation z Conclusions Sales Strategy Seminar March 2004 36
Slide 37: Future Implications
Future Implications Action will continue on all 3 drivers of sales z Penetration Improving the relevance and appeal of our pubs to non users through amenity, new products and services, hours and sales activity z Frequency Increasing visit frequency by improving value z Spend per head (SPH) Opt
Slide 38: Conclusions
Conclusions z Consumer led Customers appreciate both choice and value Market growth driven by eating out and a trend towards informality and low ticket spend Major competition from the “at home” alternative z Service orientated Focus on delivering what cannot be done easily at home Any pri
Slide 39: Questions?
Questions? Sales Strategy Seminar March 2004 39
Slide 40: Cautionary note regarding forward-looking statements
This presentation is directed only at persons who (i) have professional experience in matters relating to investments or (ii) are persons falling within Article 49 (2) (a) to (d) ("high net worth companies, unincorporated associations etc") of the Financial Services and Markets Act 2000 (Financial P
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