Mitchells & Butlers: Q3 LFL sales soft (flat y/y), but profitability holding up; in line with Marston’s earlier this week

Research evidence excerpt

Mitchells & Butlers: Q3 LFL sales soft (flat y/y), but profitability holding up; in line with Marston’s earlier this week

Karan Puri AC Europe Equity Research

(44-20) 7742-8342 23 July 2026 C A Z E N O V E

karan.puri@jpmorgan.com

Investment Thesis, Valuation and Risks

Mitchells & Butlers (Neutral; Price Target: 320p)

Investment Thesis

We like MAB for its: 1) Diversified portfolio of brands/menu items that keeps it ahead of

the competition when consumer preferences change; 2) ongoing cost efficiency/capex

initiatives that are likely to drive operational improvements; 3) consistent reduction in net

debt, with no further pension contributions required as of 2024 (post the buy-in of M&B’s

main pension scheme); 4) solid track record.

However, we remain N on the name as we see it as relatively fairly valued, with limited room

for multiple expansion.

Valuation

Our Dec-27 price target of 320p applies a target multiple of 6.3x, a 10% discount to its pre-

COVID five-year average (vs MARS/YNGA 20%/25% respectively), reflective of

concerns around UK macro and structurally lower margins post COVID.

Risks to Rating and Price Target

We see the following key risks to our Neutral rating and price target.

Upside risks:

• Faster-than-expected margin recovery towards pre-COVID levels (cost initiatives, tech

investments, etc) could bode positively for the shares

• Faster-than-expected ND reduction and hence potential dividend reinstatement could

also positively impact shares.

• Stronger-than-expected GDP growth should be a positive for the top line and hence

profitability.

Downside risks:

• Slower-than-expected margin trajectory could bode negatively for shares.

• Weather/train strike related disruptions (given ~20% exposure to London) could

negatively impact top line/profitability.