Mitchells & Butlers, the parent company of Toby Carvery, Harvester, and All Bar One, has increased prices on its menu due to anticipated cost pressures. The company is preparing to cover an extra £130 million in expenses for the upcoming year, up from the £100 million spent in the previous financial year.
The rise in costs is attributed to factors such as the recent increase in employer National Insurance and minimum wage, along with higher food prices. The government’s announcement of a 4.1% minimum wage hike from April further contributes to these challenges.
CEO Phil Urban stated that the additional £30 million in costs is mainly driven by the surge in beef and steak prices. Despite a 30% increase in steak prices, the company hopes for a decrease in costs in the coming year. Prices across menus and drinks have been raised by an average of 3.2% since October.
Mitchells & Butlers acknowledges the difficulty of passing on the full extent of cost pressures to customers, as excessively high prices could deter them from ordering certain items. In response, the company has adjusted its menu offerings, reducing the number of steak and beef dishes or re-engineering menu options where necessary.
The firm reported a 20% increase in pre-tax profits to £238 million for the year ending September 27, despite the added costs from April wage bill hikes. To mitigate cost challenges, Mitchells & Butlers has implemented various measures, including a labor scheduling system, auto-ordering for inventory management, energy-saving initiatives, and other cost-saving strategies.
While like-for-like sales grew by 4.3% over the year, the growth rate dipped to 3.2% in the final quarter due to weaker trading conditions in and around London, as well as in premium brand segments. Sales growth stood at 3.8% in the initial eight weeks of the new financial year.
