Mitchells & Butlers, the company behind Toby Carvery, Harvester, and All Bar One, has raised prices on its menu due to anticipated cost pressures. The company is preparing to absorb an additional £130 million in costs for the upcoming year, compared to the £100 million increase in the previous financial year.
Factors contributing to the cost hike include the recent rise in employer National Insurance and minimum wage rates, along with an increase in food prices. The Government’s announcement of a 4.1% minimum wage increase from April further adds to the financial strain.
Phil Urban, Mitchells & Butlers’ CEO, highlighted that a significant portion of the expected cost rise is driven by surging beef and steak prices. Despite steak prices soaring by 30%, the company is optimistic that costs may stabilize in the near future.
To mitigate the impact on customers, the company has implemented a moderate price increase averaging 3.2% across its food and beverage offerings since October. Urban emphasized the importance of maintaining meat quality and portion sizes, even amid cost escalations.
Despite the challenges, 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, such as optimizing labor scheduling, auto-ordering to manage inventory efficiently, 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, attributed to weaker trading in London and premium brand segments. Sales growth for the initial eight weeks of the new financial year stood at 3.8%.