Sales slow at Mitchells & Butlers after abrupt departures from board

Mitchells & Butlers, Britain's biggest pub restaurant operator, has seen sales growth slow since the abrupt departure of Adam Fowle as chief executive in March. It has now stepped up discount meal promotions in a bid to shore up sales volumes. Speaking a week after M&B announced the shock exit of chairman Simon Burke and fellow non-executive Mike Balfour, Jeremy Blood, the caretaker chief executive, insisted the declining sales performance was modest, claiming the group behind Browns, Harvester and Toby Carvery was still out-performing its peers. The M&B boss said recent weeks had seen promotional discounting across the drinks and restaurant trade. "Everyone is reacting. It is a bit harder to get people off their sofa at the moment." Among M&B's latest promotions is an All Bar One offer of "Nibbles & Sparkle for £5" and two weekday lunches at Sizzling Pubs for £7. M&B's comparable sales growth for the nine weeks to last weekend was 2.8%, down from 3.1% for the preceding 42 weeks. But this performance was flattered by weak comparative sales last year, Blood conceded, because the 2010 World Cup caused food sales to slow down. In addition, the latest comparable performance ought to have been further boosted in the wake of M&B's disposal last summer of 330 poor performing high street and late night bars – a sixth of the M&B estate. Stripping out these factors, M&B said the underlying sales trend was like for like growth of just 1% – a subdued rate which is expects to continue into early next year at least, despite promotional activity. Blood delivered the trading update against a backdrop of turmoil in the boardroom and growing concerns about the perceived dominance of the group's largest shareholders, Bahamas-based billionaire currency trader Joe Lewis and his Irish billionaire friends JP McManus and John Magnier. Between them they hold about 43% of shares. Asked if boardroom dramas were having an impact on the rest of the business, Blood said: "It is there in the background. But it is not affecting the business right now." Last week's boardroom departures have left only five seats occupied around the table. Two are taken up by representatives of Lewis's investment vehicle Piedmont, one by finance director Tim Jones, who has only been at the company since October last year. The remaining directors are interim chairman Bob Ivell, who joined in May, and Blood, a part-time director who stepped up to lead the executive team on an interim basis after Fowle's departure. Blood, Jones and Ivell insist they are not connected to Piedmont or Elpida, the investment vehicle of Magnier and McManus. Asked if he had met or spoken to Lewis, or the Irish investors – or their representatives – before joining M&B, Blood said: "I had never met any of them. I am an independent appointee. I did not know any of the major shareholders before I joined. I am unconnected. "When it was public and my name was in the frame I had a call with Richard McGuire [who works for Lewis]. It was a telephone conversation. I was doing my due diligence." Some of those close to the situation had previously understood that Blood had met Lewis or his representatives before joining M&B.