Mitchells & Butlers, the parent company of popular dining establishments such as Toby Carvery, Harvester, and All Bar One, has recently raised prices on its menu due to anticipated increased costs. The company is preparing for an additional £130 million in expenses for the upcoming year, up from the £100 million it incurred in the previous fiscal period.
These increased costs are primarily attributed to the rise in employer National Insurance contributions and minimum wage rates that took effect in April, along with higher food prices. The government’s recent announcement of a 4.1% increase in the minimum wage from April further contributes to the company’s financial challenges.
CEO Phil Urban stated that a significant portion of the anticipated £30 million in additional costs is driven by the surge in beef and steak prices. Despite a 30% increase in steak prices, the company aims to lower costs in the coming year. Urban mentioned that prices across menus and drinks have been raised by an average of 3.2% since October.
While the company has adjusted prices to mitigate some of the cost pressures, they are cautious not to burden customers excessively. Urban emphasized the importance of maintaining meat quality and portion sizes while acknowledging the need to balance cost increases with customer affordability.
Despite the financial challenges, Mitchells & Butlers reported a 20% increase in pre-tax profits to £238 million for the year ending September 27. The company has implemented various cost-saving measures, including optimizing labor scheduling, auto-ordering to manage stock levels efficiently, and energy conservation initiatives.
Although like-for-like sales rose by 4.3% over the year, growth slowed to 3.2% in the final quarter due to weaker performance in London and premium brands. Sales growth in the first eight weeks of the new financial year stood at 3.8%, indicating a positive start for the company’s financial performance.