Mitchells & Butlers, the company behind Toby Carvery, Harvester, and All Bar One, has implemented price increases across its menu due to anticipated additional costs of £130 million in the upcoming year, up from the £100 million incurred in the previous financial period.
The rise in costs is attributed to the recent hike in employer National Insurance and minimum wage rates in April, as well as escalating food prices. Following the government’s announcement of a 4.1% increase in the minimum wage from April, Mitchells & Butlers foresees a significant impact on its expenses.
Phil Urban, the CEO of Mitchells & Butlers, highlighted that a substantial portion of the projected £30 million rise in costs is linked to the surge in beef and steak prices. The company noted a 30% increase in steak prices, although it anticipates a potential decrease in costs in the coming year.
Despite raising prices by an average of 3.2% on menus and drinks since October, the company is cautious about passing on the full extent of cost pressures to customers to avoid pricing out certain items like steak from their offerings. Mitchells & Butlers reported a 20% increase in pre-tax profits to £238 million in the year ending September 27, despite facing additional expenses from the April wage adjustments.
To offset cost challenges, the firm has implemented various cost-saving measures such as optimizing labor scheduling, auto-ordering to manage stock levels efficiently, conserving energy, and minimizing waste. While achieving a 4.3% growth in like-for-like sales over the year, the final quarter saw a slight dip to 3.2%, influenced by weaker trading in London and premium brand segments.
Sales growth in the initial eight weeks of the new financial year stood at 3.8%. Mitchells & Butlers remains focused on navigating cost headwinds and enhancing operational efficiencies to sustain its financial performance amidst market uncertainties.
