Mitchells & Butlers, the parent company of Toby Carvery, Harvester, and All Bar One, has recently increased prices on its menus due to anticipated rising costs. The company is preparing to absorb an additional £130 million in expenses for the upcoming year, compared to the £100 million it incurred in the previous financial period.
This surge in costs is primarily attributed to the recent rise in employer National Insurance contributions and the minimum wage, alongside escalating food prices. Following the government’s announcement of a 4.1% increase in the minimum wage from April, Mitchells & Butlers is bracing for additional financial pressure.
According to Phil Urban, the CEO of Mitchells & Butlers, the projected £30 million cost spike is largely driven by the sharp increase in beef and steak prices, which have surged by 30%. In response, the company has implemented an average price hike of 3.2% on its food and beverage offerings since the beginning of October.
While the group aims to mitigate these cost pressures, it recognizes the limitations of passing on the full burden to customers. Urban stated that excessively high prices could deter customers, leading some competitors to remove steak from their menus entirely. Instead of compromising on quality or portion sizes, Mitchells & Butlers has adjusted its menu offerings to manage the impact of cost increases.
Despite the challenges posed by escalating costs, Mitchells & Butlers reported a 20% increase in pre-tax profits to £238 million for the year ending September 27. The company has implemented various cost-saving measures, such as optimizing labor schedules, automating stock management, and adopting energy-efficient practices.
While like-for-like sales grew by 4.3% over the year, the final quarter saw a slight dip to 3.2%, attributed to weaker trading in London and premium brand segments. Early indicators for the new financial year show a sales growth of 3.8% in the initial eight weeks.
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