Life is getting increasingly competitive for pub and casual dining chains while costs can be expected to jump with the introduction of the National Living Wage in April. This negative combination of factors could prove particularly painful for Mitchells & Butlers (MAB), as it threatens to derail its new boss's plans to revive trading at the pub group.
- Dividend reinstated
- Cash flow improving
- Tough competition
- Capital spending needed
- National living wage
- High debt
Mitchells, which owns brands including Harvester, Toby Carvery and O'Neill's, has a new chief executive in Phil Urban, who in his first set of results restored the dividend. The company had not paid money out to shareholders in this way since 2008, so the move was a real show of confidence. Indeed, the fact management feels the company, which has net debt equivalent to 4.3 times cash profit, can now afford to pay dividends is encouraging, but there's also plenty of reason for uncertainty about the outlook.