Mitchells & Butlers, the company behind Toby Carvery, Harvester, and All Bar One, has recently increased prices across its menu due to anticipated rising costs. The company is expecting to face an additional £130 million in expenses in the upcoming year, up from the £100 million it incurred in the previous financial year.
The cost escalations are mainly attributed to the recent hike in employer National Insurance and minimum wage rates in April, along with an increase in food prices. The government has announced a further 4.1% rise in the minimum wage from April onwards.
Phil Urban, the CEO of Mitchells & Butlers, highlighted that the projected £30 million increase in costs is primarily driven by surging beef and steak prices. Despite a 30% spike in steak prices, the company remains hopeful that costs will normalize in the coming year. Urban mentioned that they have raised prices by an average of 3.2% on their menus and beverages since early October.
To offset the cost pressures, the company has implemented various strategies such as adjusting the menu offerings and reducing the number of steak and beef dishes. However, Urban emphasized that they are committed to maintaining the quality of their products and portion sizes, and cannot transfer the entire cost burden to customers.
Despite the challenges, Mitchells & Butlers reported a 20% increase in pre-tax profits to £238 million for the year ending on September 27, despite the additional costs incurred due to the wage bill increases in April. The company has been implementing cost-saving measures like optimizing labor scheduling, auto-ordering to manage stock levels efficiently, and energy-saving initiatives.
While the like-for-like sales grew by 4.3% over the year, the growth rate slightly declined to 3.2% in the final quarter, mainly due to weaker trading in London and surrounding areas, as well as in premium brand segments. However, sales growth rebounded to 3.8% in the first eight weeks of the new financial year.
