Mitchells & Butlers, the parent company of 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 £100 million in the previous financial year. This rise in costs is primarily attributed to the recent hike in employer National Insurance and minimum wage rates, as well as escalating food prices. The government’s announcement of a 4.1% increase in the minimum wage from April further contributed to these financial pressures.
According to Phil Urban, the CEO of Mitchells & Butlers, the expected rise in costs is mainly driven by a significant increase in beef and steak prices, with steak prices surging by 30%. In response, the company has raised prices by an average of 3.2% on its menus and beverages since the start of October. Despite these adjustments, the group is cautious about passing on the full extent of cost increases to customers to avoid discouraging them from purchasing high-priced items like steak.
To mitigate the impact of rising costs, Mitchells & Butlers has implemented various cost-saving measures, including optimizing labor scheduling, implementing auto-ordering systems to manage stock levels efficiently, and adopting energy-saving initiatives. Despite the challenges, the company reported a 20% increase in pre-tax profits to £238 million for the year ending September 27. However, like-for-like sales growth slightly declined to 3.2% in the final quarter, affected by weaker trading in London and premium brand segments. Nonetheless, sales growth rebounded to 3.8% in the initial eight weeks of the new financial year.