Mitchells & Butlers, the company that operates Toby Carvery, Harvester, and All Bar One, has implemented price increases on its menu due to anticipated additional costs of £130 million in the upcoming year. This is an increase from the £100 million in extra expenses incurred in the previous financial year.
The rise in costs is mainly attributed to the recent hike in employer National Insurance and minimum wage, as well as the escalation in food prices. The government announced a 4.1% increase in the minimum wage effective from April.
According to Phil Urban, the CEO of Mitchells & Butlers, the projected extra £30 million in costs is primarily due to the surge in beef and steak prices. The company has witnessed a 30% hike in steak prices, but remains hopeful that costs will normalize in the coming year.
To offset these cost pressures, Mitchells & Butlers has raised prices by an average of 3.2% on both food and beverages since the beginning of October. However, the company is cautious not to pass on the full burden of price increases to customers to avoid discouraging consumption.
Despite the additional costs, Mitchells & Butlers reported a 20% increase in pre-tax profits to £238 million for the year ending on September 27. The company has implemented various cost-saving measures, including optimizing labor scheduling, auto-ordering to manage stock levels efficiently, and energy-saving initiatives.
While the like-for-like sales saw a 4.3% increase over the year, growth slightly dipped to 3.2% in the final quarter, mainly due to weaker trading in London and premium brand segments. Initial sales growth for the new financial year stood at 3.8%.
Mitchells & Butlers continues to navigate through cost challenges by balancing operational efficiencies and customer pricing strategies to maintain its financial performance.