Mitchells & Butlers, the parent company of Toby Carvery, Harvester, and All Bar One, has recently raised prices on its menu items in response to expected additional costs of £130 million in the upcoming year. This increase is higher than the £100 million extra the company faced in the previous financial year.
The rise in costs is attributed to the recent hike in employer National Insurance and minimum wage rates in April, along with an increase in food prices. The government’s announcement of a further 4.1% minimum wage increase from April has added to the company’s financial pressures.
Phil Urban, the CEO of Mitchells & Butlers, mentioned that a significant portion of the anticipated £30 million additional costs is due to the surge in beef and steak prices. Despite a 30% increase in steak prices, the company hopes to see cost reductions in the coming year. They have already implemented a 3.2% average price hike on menus and drinks since October.
However, the company is cautious about passing on the full burden of these cost increases to customers, as excessively high prices could deter customers from ordering steak dishes. To manage costs, they have made adjustments such as reducing the number of steak and beef offerings on the menu.
Despite the challenges, Mitchells & Butlers reported a 20% increase in pre-tax profits to £238 million for the year ending September 27. The company has been implementing various cost-saving measures, including optimizing labor scheduling, auto-ordering to control stock levels, and energy-saving initiatives.
While like-for-like sales saw a 4.3% increase over the year, growth slowed to 3.2% in the final quarter due to weaker performance in London and premium brand segments. Sales growth in the first eight weeks of the new financial year stood at 3.8%.
