Mitchells & Butlers, the company behind 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, compared to the £100 million extra incurred in the previous financial year. This rise in costs is primarily attributed to the recent hike in employer National Insurance and minimum wage rates, as well as an increase in food prices.
Chief executive Phil Urban mentioned that a significant portion of the expected additional costs, around £30 million, is driven by surging beef and steak prices. Despite a 30% increase in steak prices, the company hopes to see a reduction in costs in the coming year. Urban noted that prices across their menus and drinks have gone up by an average of 3.2% since the beginning of October.
While the group has implemented price adjustments, they are cautious not to transfer the full burden of cost pressures to customers to avoid discouraging them from purchasing higher-priced items like steak. Urban highlighted that some competitors have completely removed steak from their menus, whereas Mitchells & Butlers has either reduced the number of steak dishes or restructured their offerings.
Despite these challenges, Mitchells & Butlers reported a 20% increase in pre-tax profits to £238 million for the year ending on September 27. The company has taken various measures to cut costs, including implementing a labor scheduling system, auto-ordering to manage stock levels efficiently, and energy-saving initiatives.
Although like-for-like sales grew by 4.3% over the year, the growth rate slowed to 3.2% in the final quarter, mainly due to weaker trading in London and in premium brand locations. Sales growth for the first eight weeks of the new financial year stood at 3.8%.