Smaller pubs might be forced to stop selling food if the Government presses ahead with current proposals for a smoking ban in England, the head of Birmingham-based Mitchells & Butlers warned yesterday. Chief executive Tim Clarke said the Government's ban could lead to smaller pubs - where drink sales are the main source of profits - opening all areas to smokers if it made commercial sense. Mitchells & Butlers, which owns brands including All Bar One and O'Neills, believes such a scenario would run counter to the aims of the Government, which has recommended a smoking ban in all workplaces and areas serving food in an effort to improve the nation's health. Although he welcomes the Government's proposals for a staged four-year consultative approach for a ban, Mr Clarke believes it could result in "un-intended" consequences. "In particular, the enforced specialisation between food and smoking risks commercially incentivising more pubs than the White Paper currently anticipates, to remove food and retaining smoking throughout, other than at the bar," he said. "As a result, we believe it is in the interests of the pub industry to constructively engage with the Government during the consultations to pursue improvements to the current proposal, including permitting clearly segregated smoking and non smoking rooms within pubs. "We believe this would better achieve the Government's health objectives." The choice facing pubs groups was underlined by the fact that food represented 30 per cent of sales at Mitchells & Butler during the last financial year, rising from just 11 per cent a decade ago. "Whatever final form the legislation takes, in the majority of our estate the priority will remain to continue to develop the business to attract a wider customer base, driving strong growth in food sales in line with expectations of future demand," Mr Clarke said. Meanwhile, M&B yesterday posted better than expected annual results and confirmed it will buy back £100 million of share next year. In addition to its high street pubs, Mitchells' estate of around 2,000 pubs features suburban-based brands such as Ember Inns, Vintage, Harvester and Toby carveries. Like-for-like sales rose 5.6 per cent in the year to September 25, benefiting from higher food and drink volumes and cuts in average prices of two per cent. Annual profits totalled £184 million, which was higher than expected by analysts but 7.5 per cent lower than a year ago, reflecting the £501 million special dividend in December last year. Turnover was up 3.7 per cent to £1,560 million, while operating profit climbed 3.6 per cent to £285 million. Earnings per share rose 21 per cent to 22.2p and the final dividend payment rises 18 per cent to 6.65p, making the total for the year 9.5p M&B said that current trading continued to be strong despite uncertainty over consumer spending, with like-for-like sales ahead by 5.8 per cent in the first eight weeks of its new financial year. The improvement was achieved despite the boost to sales a year ago from good weather and England's triumph in the Rugby World Cup. Mitchells, which employs 37,000 staff, said food and drink prices had fallen by less than one per cent since the end of September and reassured investors that margins were broadly unchanged. | 
Article
