All Bar One owner Mitchells & Butlers (M&B) has said profits more than doubled for the past half-year as it benefited from easing cost inflation.
Shares in the pub and bar group rose by as much as a tenth on Wednesday morning as investors cheered its latest financial update.
The group, which also owns Toby Carvery and Miller & Carter, said profitability was driven by robust sales and efforts to reduce its costs.
M&B recorded a pre-tax profit of £108 million for the 28 weeks to April 13, up £40 million for the same period a year earlier.
The group, which operates 1,716 venues, recorded revenues to £1.4 billion for the period, up from £1.28 billion a year earlier.
It said “strong” performance included like-for-like growth of 7% as consumer spending remained robust despite pressure on household finances.
There was higher spend per customer as all of its hospitality brands reported growth, M&B told investors.
Like-for-like food sales grew by 7.7% for the half-year, with a 6% rise for drinks.
Nevertheless, it added that volumes of food and drink were marginally lower across the half-year due to a “weaker” period after Christmas, although this was offset by increased pricing.
M&B said sales growth has now surpassed the firm’s cost inflation amid continued growth after the end of the half year, with 5.3% growth over its past four weeks.
The firm added that it expects a further £55 million in cost headwinds this financial year, predominantly due to the increase in the national living wage, but this cost rise is less-than-expected due to lower energy costs and slowing food inflation.
Easing inflation and cost reductions helped to drive the firm’s sharp jump in profits over the latest period.
Phil Urban, chief executive, said: “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.
“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.”