Mitchells & Butlers Plc
Mitchells & Butlers PLC
Mitchells & Butlers PLC (M&B) is a major operator of managed pubs and restaurants in the United Kingdom. The corporation runs restaurants and pubs below the Alex, All Bar One, Browns, Crown Carveries, Ember Inns, Harvester, Innkeeper's Lodge, Metro Professionals, Miller & Carter, Nicholson's, O'Neill's Premium Country Dining Group, Sizzling Pub Company, Toby Carvery, Village Pub & Kitchen, and Vintage Inns brand names (MAB, 2011). Authentic disposable revenue in the United Kingdom has almost doubled more in the past three decades. Of this total the drinking out and eating out markets, where Mitchells & Butlers runs, have a joint size of approximately £70bn. We approximate that the eating out market has doubled in value in the past two decades to £47bn, whereas the drinking out market is presently worth approximately £23bn, having diminished in the last half decade (Reece, 2003). From September 25, 2011, Mitchells & Butlers PLC encompassed an estate of 1,605 sites comprising of 69 franchised and leased sites in the United Kingdom and 37 pub restaurants in Germany, dishing out more than 125 million foods and 435 million drinks every year (MAB, 2011). The headquarters of the corporation is in Birmingham, UK. Mitchells & Butlers PLC is considered third in revenue group amid associated corporations. The size of the market in relation to the revenue of Restaurants sector is presently approximated at roughly 9.38 Billion. Mitchells & Butlers PLC retains about 1.82 Billion in revenue taking approximately 19-percent of equities listed below Restaurants sector (Reece, 2003). The Group operates primarily in the UK pub sector, which is itself part of the wider drinking out and eating out market, which also includes restaurants, social clubs, nightclubs and fast food outlets. The pub sector of United Kingdom comprises a number of pubs: 60000 in total, which may be generally grouped into three different business models: leased pubs-about 50% of sites, individual, independently owned pubs- about 30% of sites, and managed pubs-about 20% of sites (Form 20-F, 2011). Out of all Mitchells & Butlers’ sites, 94-percent are managed. Managed pubs are normally possessed by a pub corporation, for instance Mitchells & Butlers PLC, or brewer and run by a salaried manager and staff members hired by the owning corporation, which sets the range of products and detail of style of service (Form 20-F, 2011). Financial Performance of Mitchells & Butlers PLC
Over the years, the Group has performed remarkably well financially regardless of the cyclic character of the industry (John, 2003). A critical evaluation of the financial statements gives us a number of perceptions. The matter of cyclicality is plaguing the restaurant pubs industry and the future outlook in the United Kingdom is not great bearing in mind the stout performance of the past five years. Mitchells & Butlers PLC has dealt with this by augmenting the share of food sales in the revenue sources. Excess debt has caused high Debt to Equity Ratio and this is not pleasing news as the firm intends to go for more capital expansion. In addition the percentage of cash flow employed for CAPEX is increasing as shown below (diagram) Rising rates of interest in the economy is a matter of concern as it reduces both capital investments and alleviates the domestic demand. On a positive note, the cash flow from operations has increased close to 10 times in comparison to the previous year in spite of a big CAPEX. Mitchells & Butlers PLC has single handily increased its market share by about 5% (Form 20-F, 2011). The operating power for Mitchells & Butlers PLC is higher as a result of the high fixed costs of CAPEX. Nevertheless, still the total financial power of Mitchells & Butlers PLC is well under control when compared to other players in the industry. Internationalisation...