Mitchells & Butlers Plc · LSE:MAB
Mitchells & Butlers — Investor Day (January 2010)
52 slides from Mitchells & Butlers's investor day presentation, Jan 21, 2010
Slide 1: Opportunities for Growth – Analyst Seminar
Opportunities for Growth Analyst Seminar – 21 January 2010 1
Slide 2: Introduction
Introduction Focusing on medium term direction Key underlying beliefs: - Eating out as a market has long term attraction - The drinking out occasion is in long term decline - Mitchells & Butlers well positioned to create value Growth strategy is an evolution of existing plans Opportunities for growt
Slide 3: Mitchells & Butlers estate as at FY09
Mitchells & Butlers estate as at FY09 # of pubs AWT, £k Total 1,970 19.8* Value 746 16.9 Suburban 491 23.4 City & Country 577 20.9 * UK managed pubs Company EBITDA per managed pub £223k 3
Slide 4: Our opportunities for growth
Our opportunities for growth Same outlet sales and profit growth Sustainable margin delivered through strong operating capabilities Increased number of pubs from variety of sources with associated scale benefits Evolution of our strategy with greater brand focus 4
Slide 5: Business dynamics
Business dynamics Drinks-led Food-led outlet outlet AWT £22k AWT £17k 33% EBITDA margin COGS 31% 2% pts lower 26% Cash EBITDA Employment 23% 19% higher 16% Other costs 19% EBITDA 27% 25% Higher profits from food-led pubs 5
Slide 6: Our brands and formats
Our brands and formats Expansion Maintain Selective Active Premium Bars & Ember Miller & Vintage Browns Country venues Inns Carter Inns Dining Community Town Metro Toby Professionals All Bar One Harvester pubs pubs Carvery Hollywood Crown Sizzling Pub Scream Nicholson’s O’Neill’s Bowl Carveries Comp
Slide 7: Statement of intent
Statement of intent “Developing Mitchells & Butlers to become the UK’s preferred choice for informal eating out, with great brands that satisfy key customer occasions, to grow shareholder value” 7
Slide 8: Agenda for today
Agenda for today Great brands drive like-for-likes Adam Martin Strong operating capabilities Adam Fowle Headroom for growth Adam Fowle Growing shareholder value Jeremy Townsend 8
Slide 9: Supply-driven market map
Supply-driven market map Residential Local Pubs Pub Restaurants Drinks Food led led High St City Centre Pubs & Bars Restaurants City Centre 9
Slide 10: Eating and drinking out market
Eating and drinking out market Proportion of household expenditure on eating and drinking out % 10 9 1970 2008 8 7 64% Drinking out 40% 6 5 4 3 2 Eating out 60% 36% 1 0 78 84 94 76 88 96 70 72 82 98 00 74 80 92 02 06 04 86 90 08 19 19 19 19 19 19 19 19 19 19 20 19 19 19 20 20 20 19 19 20 Increasing
Slide 11: Eating and drinking out expenditure
Eating and drinking out expenditure Eating and drinking out £72bn Drinking out Eating out £29bn £43bn High energy Quiet drink Re-fuelling Social dining Market shaped by consumer occasions Source : ONS Consumer Trends Survey 2009 11
Slide 12: Price dimension
Price dimension Price signals market positioning - Eating out and drinking out is a social occasion - Most people want to be with “people like me” - Price plays a role in grouping consumers Price sensitivity of different occasions Price is an important factor in purchase 12
Slide 13: New market maps: drinks-led
New market maps: drinks-led Drinks-led Higher Price per drink Lower High energy Quiet drink 13
Slide 14: New market maps: food-led
New market maps: food-led Drinks-led Food-led Higher Higher Price Price per per drink meal Lower Lower High energy Quiet drink Re-fuelling Social dining 14
Slide 15: Market map
Market map Drinks-led Food-led Higher Higher Medium High High Price Price per per drink meal Low Medium High Lower Lower High energy Quiet drink Re-fuelling Social dining Differing levels of attractiveness 15
Slide 16: Mitchells & Butlers market map
Mitchells & Butlers market map Drinks-led Food-led Premium Higher Browns Country Higher All Bar One Dining Miller & Metro Carter Professionals Vintage O’Neill’s Nicholson’s Inns Price Toby Price per Carvery per drink Ember Inns Harvester meal Bars & Sizzling venues pub co Community Town Crown Lower
Slide 17: Value
Value Drinks-led Food-led Premium Higher Browns Country Higher All Bar One Dining Miller & Metro Carter Professionals Vintage O’Neill’s Nicholson’s Inns Price Toby Price per Carvery per drink Ember Inns Harvester meal Bars & Sizzling venues pub co Community Town Crown Lower Scream pubs pubs Carverie
Slide 18: Suburban
Suburban Drinks-led Food-led Premium Higher Browns Country Higher All Bar One Dining Miller & Metro Carter Professionals Vintage O’Neill’s Nicholson’s Inns Price Toby Price per Carvery per drink Ember Inns Harvester meal Bars & Sizzling venues pub co Community Town Crown Lower Scream pubs pubs Carve
Slide 19: City & Country
City & Country Drinks-led Food-led Premium Higher Browns Country Higher All Bar One Dining Miller & Metro Carter Professionals Vintage O’Neill’s Nicholson’s Inns Price Toby Price per Carvery per drink Ember Inns Harvester meal Bars & Sizzling venues pub co Community Town Crown Lower Scream pubs pubs
Slide 20: Customer satisfaction
Customer satisfaction Proportion of guests satisfied with recent visit 90% 92% 92% 88% 89% 87% Harvester Vintage Sizzling Toby Premium Crown Inns Pub Carvery Country Carveries Company Dining Growth brands appeal strongly to customers 20
Slide 21: Brand marketing
Brand marketing Opportunity to grow usage High consumer acceptance Plenty of non users Good conversion to loyal customers Brand scale enables advertising E.g. strong ROI on Toby Sunday advertising, +6% sales Brand advertising works 21
Slide 22: Brand performance
Brand performance Average AWT, FY09 Average EBITDA per outlet, FY09 +27% +26% 21 285 17 226 Maintain Expansion Maintain Expansion Stronger performance from expansion brands 22
Slide 23: Summary
Summary Eating out growing share of household expenditure New market map to reflect customer occasions and price points Twelve expansion brands positioned for like-for-like sales growth Exposure to growing segments Proven customer appeal Superior financial performance Further potential for like-for-
Slide 24: Agenda for today
Agenda for today Great brands drive like-for-likes Adam Martin Strong operating capabilities Adam Fowle Headroom for growth Adam Fowle Growing shareholder value Jeremy Townsend 24
Slide 25: The constant challenge
The constant challenge Operational Service efficiency and sales and profit Daily Reporting Balancing service excellence with cost focus 25
Slide 26: Sales growth by level of customer satisfaction
Sales growth by level of customer satisfaction FY09 sales growth by customer +6.6% satisfaction quartile, % Top 25% Top 25% +3.4% +1.9% Bottom Bottom 25% 25% -4.2% Customer satisfaction drives sales 26
Slide 27: Drivers of customer satisfaction
Drivers of customer satisfaction Average across our main brands, % Environment 22 Service 38 41 Product Our people are core to customer satisfaction 27
Slide 28: Different service models
Different service models Premium Crown Country Carveries Dining Self service Full table service Lower cost Higher cost Matching customer needs with economics 28
Slide 29: Service model evolution
Service model evolution +13% +6% 400 self service taps to be rolled out by end April Drink sales Customer satisfaction with drink service Continuous improvement of service model 29
Slide 30: Our people
Our people Recruiting the right people and matching service models - 60% of managers recruited internally Training people - 1,400+ kitchen colleagues have enrolled in NVQs in the past year Retaining people – increasing stability - 80% of managers have more than one year’s service - 65% of kitchen ma
Slide 31: Operational controls
Operational controls Employment and product costs are £1.1bn pa Product costs - Focusing on waste - Menu management Productivity - Labour scheduling - Employment cost constant over five years as food mix increased from 30% to 41% of sales Relentless focus on operational controls 31
Slide 32: Operational controls – FY09
Operational controls – FY09 14 million more meals 3 million more drinks 700,000 fewer staff hours Moving from weekly to daily monitoring Daily operational controls enhance margin management 32
Slide 33: Customer feedback – the essential measure
Customer feedback – the essential measure 1,400 outlets run a regular guest feedback programme Over 600,000 guest responses collected in 2009 Delivering sustainable improvements in service Continuous feedback helps shape the business 33
Slide 34: Summary
Summary Operational Service efficiency and sales and profit Customer Net margin satisfaction +3% improvement Daily Reporting Sales up +3.3% Balancing service excellence with cost focus 34
Slide 35: Agenda for today
Agenda for today Great brands drive like-for-likes Adam Martin Strong operating capabilities Adam Fowle Headroom for growth Adam Fowle Growing shareholder value Jeremy Townsend 35
Slide 36: Overview
Overview Potential to double each of our active expansion brands 3 sources of pub growth opportunity - Internal conversions - Single site acquisitions - Industry consolidation The pace of growth is in our control 36
Slide 37: Relative brand size
Relative brand size Outlet numbers 1,200 700 670 Mitchells & Butlers brands 370 197 227 172 111 133 57 . Co try y ns r s on s t s Hu te er d’ ie es In po un es er al b rv pr za Pu on e rv rv Ca rs Co Ex ag z Ca Ha he cD Pi g by nt ng m a lin et zz M n ni iu Vi To zz W ow Pi Di em Si Cr Pr Significan
Slide 38: Multiple brands in a local market
Multiple brands in a local market Bournemouth area 6 Harvesters: all AWTs well above average 21 other pubs: combined AWT at Mitchells & Butlers average Far from the limit of saturation 38
Slide 39: Pub growth potential
Pub growth potential 700+ c.1,250+ c. 400 c.150 Internal Single site Major industry Total conversions acquisitions consolidation opportunities opportunities Significant pools of opportunities 39
Slide 40: Conversions from Maintain to Expansion
Conversions from Maintain to Expansion +60% £18k +63% £279k £11k £171k ROI of 25% Pre- Post- Pre- Post- conversion conversion conversion conversion AWT EBITDA per outlet Note: 89 conversions from FY05-FY09 Strong returns from conversions 40
Slide 41: 150 internal conversion opportunities
150 internal conversion opportunities From Maintain To Expansion Community Bars and Sizzling Nicholson’s pubs venues Pub Co Metro Scream Town pubs O’Neill’s Professionals Large pool of conversion opportunities within estate 41
Slide 42: Single site acquisitions
Single site acquisitions £398k ROI of £28k 13% Average AWT Average EBITDA per outlet Note: 14 sites, FY07-FY09 Single site acquisition track record is strong 42
Slide 43: c. 400 single site acquisition opportunities
c. 400 single site acquisition opportunities Retail park locations, expanding our current base of 20 pubs New development sites Single pub sites Large pool of single site acquisition opportunities 43
Slide 44: Industry consolidation – 249 pubs
Industry consolidation – 249 pubs +30% £22k +48% £290k £17k £197k ROI of 12% Pre- Post- Pre- Post- conversion conversion conversion conversion AWT EBITDA per outlet Brands add value to portfolio acquisitions 44
Slide 45: Significant pools of potential sites
Significant pools of potential sites 700+ c.1,250+ c. 400 c.150 Internal Single site Major industry Total conversions acquisitions consolidation opportunities opportunities Growth not dependent on consolidation 45
Slide 46: Agenda for today
Agenda for today Great brands drive like-for-likes Adam Martin Strong operating capabilities Adam Fowle Headroom for growth Adam Fowle Growing shareholder value Jeremy Townsend 46
Slide 47: Reduced debt levels
Reduced debt levels Feb 08 Sept 09 £m £m Net debt (2,910) (2,600) Unsecured drawings (595) (383) Facility headroom +£105m +£167m Our financial position is stable 47
Slide 48: Timing and pace of expansion
Timing and pace of expansion Cash generative business We will assess investment opportunities as they arise – ensuring high returns To be balanced with: - Pension funding requirements - 2010 facility refinancing - Resumption of dividend payments Opportunity to grow shareholder value 48
Slide 49: Potential capital expenditure
Potential capital expenditure £m 160-180 140 40-60 Expansionary 20 capex Conversions £10m p.a. Single site Maintenance acquisitions capex 120 120 £30-50m p.a. FY10 Anticipated future capital expenditure Significant expansion within our control 49
Slide 50: Opportunity for value creation
Opportunity for value creation Rising food mix offset by higher sales per outlet Estate evolution increases proportion of high EBITDA outlets Greater purchasing power offsets costs inflation Increased scale reduces overheads as a proportion of sales Continued strong capital returns Sales driven grow
Slide 51: Summary
Summary “Developing Mitchells & Butlers to become the UK’s preferred choice for informal eating out, with great brands that satisfy key customer occasions, to grow shareholder value” 51
Slide 52: Questions & Answers
Questions & Answers Analyst Seminar – 21 January 2010 52