Mitchells & Butlers, the parent company of popular dining establishments like Toby Carvery, Harvester, and All Bar One, has recently increased prices on its menus due to anticipated additional costs of £130 million in the upcoming year, up from the previous year’s £100 million. This rise in costs is mainly attributed to the recent hike in employer National Insurance and minimum wage rates, along with escalating food prices.
CEO Phil Urban stated that a significant portion of the anticipated extra costs, totaling £30 million, is due to a surge in beef and steak prices. Despite a 30% increase in steak prices, the company is hopeful that costs will stabilize in the near future. To offset these financial pressures, Mitchells & Butlers has implemented various cost-saving measures such as optimizing labor schedules, implementing auto-ordering systems to manage inventory efficiently, and adopting energy-saving initiatives.
While the company has raised prices by an average of 3.2% since October, Urban emphasized the importance of maintaining meat quality and portion sizes, even if not all cost increases can be passed on to customers. He noted that some competitors have removed steak from their menus altogether, but Mitchells & Butlers has opted to adjust its offerings by reducing the number of steak and beef dishes or modifying the menu structure to mitigate price impacts on consumers.
Despite the challenges posed by rising costs, Mitchells & Butlers reported a 20% increase in pre-tax profits to £238 million for the year ending September 27. The company experienced a 4.3% growth in like-for-like sales over the year, although this figure slightly dipped to 3.2% in the final quarter, primarily due to subdued trading in London and weaker performance in premium brands. In the initial eight weeks of the new financial year, sales growth stood at 3.8%, indicating a positive start to the period.