Mitchells & Butlers, the parent company of Toby Carvery, Harvester, and All Bar One, has recently increased prices on its menu due to anticipated additional costs of £130 million in the upcoming year, up from the £100 million incurred in the previous financial year.
The rise in costs is attributed to the recent hike in employer National Insurance and minimum wage, along with escalating food price inflation. The government’s announcement of a 4.1% increase in the minimum wage from April further compounded the financial burden.
Phil Urban, the CEO of Mitchells & Butlers, highlighted that the projected £30 million surge in costs is primarily driven by the sharp increase in beef and steak prices. The company reported a 30% spike in steak prices but expressed optimism that costs may stabilize in the following year.
Despite raising prices by an average of 3.2% across their offerings since October, the company is cautious about passing on the full extent of cost pressures to customers. Urban emphasized the importance of maintaining meat quality and portion sizes, even as they adjust their menu offerings to navigate 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 expenses incurred from the April wage bill hikes. The company has implemented cost-saving measures such as a labor scheduling system, auto-ordering to manage stock levels efficiently, and energy-saving initiatives to mitigate financial strains.
Although the company recorded a 4.3% growth in like-for-like sales over the year, sales growth slightly dipped to 3.2% in the final quarter, primarily due to weaker trading in London and surrounding areas, as well as in premium brand segments. The new financial year started with a sales growth of 3.8% in the initial eight weeks.