Mitchells & Butlers (M&B) may not have had the best time of it lately, what with a £391 million hedging loss, the departure of its finance director and chairman and some of the toughest trading conditions anyone can remember.

The near 70 per cent fall in the share price in the past 12 months shows just how tough things have been, although the rally in the past couple of weeks suggests it may be past the worst. Today's third-quarter trading update shows that, while trading conditions are not getting any easier, M&B is still winning market share.

The fall in its drink sales was minor in the context of the beer market volume decline of 10 per cent, while its like-for-like food sales in the 10 weeks to July 19 were up 5.1 per cent.

Value-for-money concepts like the Sizzling Pub Co are clearly tapping into the consumer trend towards trading down, and the resultant volume increase has allowed M&B to restrict its unit food cost rises to about 3 per cent compared with food commodity inflation of about 7-8 per cent. Staff productivity gains and other management initiatives are also mitigating the impact of soaring food and energy costs.

Things may get tougher before they get any easier, but M&B's business model looks as robust as any. There is also good news for investors on the financial front. The company's decision last year to abandon its asset-ownership model and jump into bed with Robert Tchenguiz, the property entrepreneur, ended in acrimony and a £391 million hedging loss. Any fears over the strength of its balance sheet should be dispelled by the readiness with which the banks, buoyed by M&B's strong cashflows, have provided a new £600 million facility. By September, net debt will have come down £200 million from January's figure of £2.9 billion.

In a further positive note, it emerged that a more open-minded approach from HM Revenue & Customs means M&B may be able to convert to tax-efficient real estate investment trust status without having to split in two. This would save up to £50 million of demerger costs and avoid the need to scrap its debt securitisation.

Although it may yet decide to cash in its property chips, for now it can focus on shifting more steak and chips without the distraction of diverging investor views on asset ownership.

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