Mitchells & Butlers, the parent company of 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. This surge in expenses follows a £100 million increase in the previous financial year primarily caused by the rise in employer National Insurance and minimum wage rates, along with escalating food prices. The government’s recent announcement of a 4.1% minimum wage hike from April has further added to these financial pressures.
Phil Urban, the CEO of Mitchells & Butlers, highlighted that a significant portion of the projected £30 million rise in costs is attributed to the spike in beef and steak prices. Despite a 30% surge in steak prices, the company remains optimistic that costs may stabilize in the near future. To offset these expenses, the group has implemented a modest average price increase of 3.2% on its food and beverage offerings since October.
While striving to manage costs effectively, Mitchells & Butlers is mindful of not burdening customers with the full impact of these financial challenges. Urban emphasized the importance of maintaining product quality and portion sizes, even if it means absorbing some of the cost increases internally. The company is also exploring menu adjustments, such as reducing the number of steak and beef dishes or menu redesign, to mitigate the impact on customers.
Despite the economic pressures, 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 systems, energy conservation initiatives, and inventory management strategies to enhance efficiency and reduce waste. While like-for-like sales saw a 4.3% growth over the year, it slightly dipped to 3.2% in the final quarter, mainly due to weaker performance in London and premium brand segments.
The company remains optimistic, with sales growth standing at 3.8% in the initial eight weeks of the new fiscal year. These strategic initiatives align with Mitchells & Butlers’ commitment to navigating the current economic challenges while ensuring customer satisfaction and sustainable business growth.