Mitchells & Butlers said it is braced to pay an additional £130million of costs in the year ahead – up from the £100million extra it paid in the past financial year
The owner of Toby Carvery, Harvester and All Bar One has hiked prices across its menu – as it warned of further cost pressures to come.
Mitchells & Butlers said it is braced to pay an additional £130million of costs in the year ahead – up from the £100million extra it paid in the past financial year.
This was largely following the April employer National Insurance and minimum wage hike, as well as higher food price inflation. The Government announced earlier this week that the minimum wage will jump by another 4.1% from April.
Phil Urban, chief executive of Mitchells & Butlers, said the additional £30million cost it is expecting is largely being driven by a jump in beef and steak prices.
The group said steak prices had raced 30% higher – but hopes costs will come down in the next year or so. Mr Urban told the Press Association it had raised prices by 3.2% on average across its menus and drinks since the start of October.
But he said the group cannot pass on the full hit of its cost pressures to customers, who “just wouldn’t eat steak” if prices became too high.
He said: “Some of our competitors have taken steak off the menu entirely. Where steak is not the core product, we have reduced the number of steak and beef dishes or re-engineered the menu.
“What I won’t do is change the quality of the meat or the portion size… and nor can we pass on all that (cost increase) on to the customer.”
Mitchells & Butlers saw its pre-tax profits rose by a fifth to £238million in the year to September 27, despite the extra costs of April wage bill increases.
The firm has been taking action to make savings in the face of cost headwinds, including through a labour scheduling system and auto-ordering to keep stock levels in check and minimise waste, alongside energy saving measures.
Like-for-like sales were up 4.3% over the year, but growth slipped to 3.2% in the final quarter due to weaker trading in and around the London area and in more premium brands.
Sales growth was 3.8% in the first eight weeks of the new financial year.
