Mitchells & Butlers PLC (LSE:MAB) shares climbed 11% to 284p on Friday after the pub and restaurant group posted better-than-expected full-year results and reported a strong start to the new financial year.
The update, combined with supportive broker commentary, helped settle nerves following weeks of debate about consumer resilience heading into the winter.
The owner of All Bar One, Harvester and Toby Carvery delivered numbers that came in slightly ahead of forecasts.
Adjusted EBIT rose 6% to £330 million, which Jefferies said was about 1% above consensus, while adjusted profit before tax was up 17% at £246 million, roughly 4% ahead of expectations. Revenue grew 4% to £2,711 million.
Early trading in the new year appears to have reassured investors.
Like-for-like sales were up 3.8% in the first eight weeks of the financial year, compared with 3.1% in the final quarter of 2025. Jefferies said this was “robust” performance given the uncertainty that typically precedes a Budget and showed that customer demand had remained resilient.
The broker maintained its buy rating and 355p price target, noting that Mitchells & Butlers is well placed to win market share at a time when smaller operators are under strain.
It pointed to the group’s scale, a largely freehold estate and a wide mix of brands as competitive strengths.
Even so, Jefferies flagged that the cost base will remain under pressure.
The company expects around £130 million of additional costs in the current financial year (roughly 6% of the total) driven by labour, statutory increases and higher food inflation.
In contrast to last year, management is not guiding to profit growth at this stage, which Jefferies said was sensible given the scale of the headwinds.
Leverage continues to fall, with net debt excluding leases at 1.8 times EBITDA. Jefferies noted that the recent appointment of a new chief financial officer could eventually pave the way for a refreshed capital-allocation strategy, though major changes in the near term are unlikely.
The broker also highlighted what it sees as a “significant debt-to-equity value transfer” over the next three years as the group continues to generate strong cash flow.
At 6.6 times forecast FY26 enterprise value to EBITDA, Jefferies said the company’s valuation has broadly returned to its pre-pandemic range, leaving room for further upside if trading momentum holds.
With the shares rallying and the earnings beat now digested, attention will turn to how consumer behaviour evolves post-Budget.
Jefferies said concerns about household spending could soften short-term sentiment, but it continues to view Mitchells & Butlers as its preferred play in the sector.