Demand for food boosts Mitchells & Butlers

Evidence that it may be comes today in the form of a trading update from Mitchells & Butlers, one of the biggest pub companies in the UK and owner of such brands as O'Neill's, All Bar One and Nicholson's.

It said that sales in the nine weeks to September 18 are up a handy 4.4%, a rise which should translate into booming profits if it continues.

The pub sector has had a tough three years, with the bigger players buffeted by debts and falling property prices and individual landlords struggling to make ends meet.

A recession, a smoking ban and cheap supermarket booze hardly helped.

M&B boss Adam Fowle said: "This is a very encouraging performance, particularly given the present consumer economy and underlines the strength of the M&B business. I am pleased at the speed of delivery on our strategic plan."

That plan involes selling off "wet" pubs to focus on food-led outlets. The Harvester chain will be expanded quickly as part of the scheme.

Food sales are 7% up in the period, a vindication of the strategy, perhaps.

M&B has taken in £500 million from disposals so far, spending nearly £20 million to buy 22 Ha Ha branded sites.

Geof Collyer of Deutsche Bank thinks M&B needs to do more deals to reach its potential.

He said: "Whilst the recent Ha Ha Bar & Canteen deal will help, we think that capex budgets need to rise above the £200m forecast by the group unless there are a lot more deals like the Ha Ha, or maybe something bigger coming down the track."

The City expects M&B to make profits for the year of around £290 million.

The group is carrying around £2.3 billion of debt.