Mitchells & Butlers, the UK-based hospitality group, reported flat overall sales in the quarter ending July 18, with food sales declining amid an unusual heatwave, while drink sales showed growth supported by the FIFA World Cup. The group, which operates around 1,700 pubs and restaurants including Toby Carvery, Miller & Carter, Harvester, and Sizzling Pubs, said food sales fell by 2.4 percent during this period, particularly impacted at its Toby Carvery and Miller & Carter venues known for steak and carvery offerings.

Despite the drop in food revenue, drink sales increased by 2.6 percent, buoyed by strong trading at its drink-led locations such as All Bar One, O’Neill’s, and Nicholson’s. Total sales were flat compared to the previous year, a slowdown after a 3.3 percent rise in the first half of the financial year.

Shares in the company declined by 5.1 percent, closing at 261 pence. Mitchells & Butlers attributed the weakened food sales largely to the “exceptional heat,” which dampened demand for heavier meal options that the group’s chains typically serve.

The group also highlighted ongoing investment in its estate, having completed 181 site conversions and refurbishments during the quarter and acquiring ten new sites, including eight freeholds in the UK and two in Germany. The company expects operational costs to rise by approximately £120 million this year, driven mainly by increased employer national insurance contributions and the national living wage.

Chief Executive Phil Urban emphasized the company’s resilience amid the challenging weather, stating that the diversified portfolio and continued investment program have helped mitigate external pressures. Urban expressed confidence in meeting full-year expectations despite the recent sales setback.

Market analysts offered mixed but cautiously optimistic views on the outlook. Jefferies noted that recent government announcements on business rates relief would likely provide only modest benefits in the short term but suggested Mitchells & Butlers is gaining market share amid a cost-sensitive environment. Peel Hunt maintained a buy rating on the stock with a target price of 375 pence per share.

Mitchells & Butlers is majority-owned by a consortium through Odyzean Limited, which holds 57 percent of the shares. This consortium includes currency trader Joe Lewis, whose family owns Tottenham Hotspur football club, alongside Irish investors John Magnier and JP McManus.