JP McManus-backed UK pub group sees sales eroded by Omicron spread

JP McManus jointly holds a sizeable stake in Mitchells and Butlers with John Magnier.

Irish-backed UK pub operator Mitchells and Butlers suffered a 10% drop in like-for-like sales over the Christmas period, as the spread of the Omicron variant of Covid-19 significantly eroded social gatherings in Britain.

The group operates around 1,700 chain pubs and restaurants across the UK and is part-owned by Irish financiers JP McManus and John Magnier.

In a first-quarter trading update, covering the 15 weeks to January 8, Mitchells and Butlers said it made a strong start to its current financial year, with like-for-like sales growth of 2.7% over the first eight weeks. 

However, it said things turned in early December when Omicron concerns became more pronounced.

Over the seven weeks since the last update, like-for-like sales have been down 6%, with the adverse impact of Omicron being particularly felt in the most recent four weeks — over the important festive season — during which like-for-like sales have been down 10.2%,” it said.

Mr McManus and Mr Magnier jointly own — through their Elpida investment vehicle — more than 23% of Mitchells and Butlers, which owns UK pub and family restaurant chains such as O’Neill’s, All Bar One, and Harvester.

In November, the group reported a narrowing of its annual losses, but warned that rising costs and labour shortages, due to Brexit, may hamper future earnings.

Just before Christmas, it agreed a £650m (€760m) pension insurance deal with Legal & General, which insures all members of its executive pension plan.

In its latest trading update, the group said the trading environment in the UK remains “uncertain”.

“As previously announced, in the current year, inflationary cost headwinds are expected to be higher than the normal pre-Covid level of £60m to £65m, due particularly to high levels of statutory wage rate increases and persistent historic high prices in energy markets,” it warned.