Owner of Edinburgh’s historic Sheep Heid Inn and All Bar One warns future of hospitality sector 'extremely uncertain'
Mitchells & Butlers, the owner of All Bar One, Miller & Carter and scores of popular Scottish pubs, is to tap investors for fresh cash after lockdowns forced the closure of hundreds of sites.
The pubs and restaurant giant said it was “prudent” to consider an equity raise as it burns through up to around £40 million in cash a month before £50m of quarterly debt payments during lockdown.
The news came as the group, which has more than 1,700 pubs and brands including Harvester and Toby Carvery, saw total sales over its first quarter to January 2 plummet 67.1 per cent as tightening coronavirus restrictions hit trading and led to increasing numbers of venues closing, with all its sites closed from December 30.
Sales fell 30 per cent on a like-for-like basis, when only taking into account periods where stores were able to open.
The firm said it has cash balances of £125m. No decision has yet been made on the timing or size of an equity capital raise.
M&B, which also runs scores of well-known Scottish watering holes including Edinburgh’s historic Sheep Heid Inn, recently axed about 1,300 jobs and closed up to 20 of its pubs and restaurants as the sector has been devastated by the pandemic and government measures to try to control it.
The firm said: “We welcome recent positive news on vaccine approval and rollout but the future facing the hospitality sector remains extremely uncertain.
“It is not possible to estimate with any confidence what restrictions on our ability to trade lie ahead of us and for how long.
“As a result, the directors believe it is prudent to explore an equity capital raise, to give the group increased financial and operational flexibility.
“No decision has yet been made with regards to the timing, size, or terms of any such equity capital raise.”
Chief executive Phil Urban said: “We are now in a third national lockdown. I am consistently impressed by the resilience and energy of our teams as we repeatedly open and close businesses that we have invested in to make Covid secure and urge the government to better understand the huge impact these restrictions are having on the hospitality sector.
“The Job Retention Scheme is temporarily protecting some employment but there is a real and pressing need for support for businesses themselves if we are to return to being the vibrant sector and important employers that we were.
“Mitchells & Butlers was a high performing business going into the pandemic and with the support of our main stakeholders I have every confidence that we can emerge in a strong competitive position once the current restrictions on us are lifted.”
In November, the group said its suburban brands had fared well, even with coronavirus restrictions, with Miller & Carter and Premium Country Pubs leading the way.
But its city centre drinks-led pubs, such as Nicholson’s, have taken the brunt of the crisis, as trading woes have been compounded by many offices remaining empty.
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