Mitchells & Butlers acquires Pesto Restaurants

Mitchells & Butlers (M&B), operator of brands including Browns and Miller & Carter, has acquired the 10-strong Neil and Sara Gatt-founded portfolio, Pesto Restaurants. 

Located in the North West and the Midlands, Pesto offers authentic and freshly prepared Italian small plates. Under the terms of the acquisition, the Gatts will continue to manage the business for an 18-month period to help M&B identify and covert sites to the Pesto brand. 

The consideration for the company will be determined over two payments and is partly contingent on its future performance, but will be no more than £15m. 

Diversifying the estate

Phil Urban, CEO of M&B, says: "I'm delighted to welcome the Pesto team to M&B. It's a business with a distinctive USP which we've long admired and which will help us to further diversify and premiumise our brand portfolio."

Neil Gatt adds: "After 18 years, Sara and I are delighted to see our business become part of the M&B portfolio of brands. For Pesto to fulfil its true potential as an innovative and unique brand, it was always necessary for us to team up with a partner that had a substantial property portfolio within which to grow the brand and there is no better partner than M&B to do that. We want to sincerely thank our very loyal and committed team at Pesto for all of their hard work and dedication over the years. We look forward to working hard over the next 18 months to integrate our fantastic people and our amazing business into the M&B family."

Profit recovery

Like-for-like sales across the group have increased by 7%, with strong performances across all brands driven by increases in spend per head.

Total sales at M&B for the 28 weeks ended 13 April 2024 were just shy of £1.4bn (£1,396m), an 8.9% growth on its half-year in 2023.

Its operating profit of £164m, the group says, was a marked recovery from last year (£99m).

"Continued like-for-like sales outperformance against the market coupled with easing inflationary costs and focus on efficiencies has resulted in very strong profit recovery for the period," says Urban.

"We remain focused on our Ignite programme of initiatives and our successful capital investment programme, driving further cost efficiencies and increased sales. We have confidence that continued focus on effective delivery of our strategic priorities will generate further value from our enviable estate portfolio and customer offers, enabling us to build further momentum throughout the year, with a strong foundation for long-term outperformance."

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