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 in the previous financial year. These cost hikes are mainly attributed to the rise in employer National Insurance and minimum wage, along with increased food prices. The government has announced a 4.1% minimum wage increase starting from April.
The CEO of Mitchells & Butlers, Phil Urban, highlighted that a significant portion of the expected extra costs, around £30 million, is driven by surging beef and steak prices. Despite a 30% increase in steak prices, the company hopes for cost reductions in the coming year. Urban mentioned that prices across their menus and drinks have been raised by an average of 3.2% since October.
While the company has increased prices, it is cautious about passing on all cost pressures to customers, as excessively high prices could deter them from purchasing certain items like steak. To manage costs, Mitchells & Butlers has made strategic menu adjustments, such as reducing the number of steak and beef dishes or re-engineering the menu, without compromising on quality or portion sizes.
Despite the challenges, Mitchells & Butlers reported a 20% rise in pre-tax profits to £238 million for the year ending on September 27. The company has implemented various cost-saving measures, including a labour scheduling system, auto-ordering to control stock levels, energy-saving initiatives, to mitigate the impact of rising costs.
Although like-for-like sales increased by 4.3% over the year, growth slightly declined to 3.2% in the final quarter due to weaker trading in London and surrounding areas, as well as in premium brands. The company reported a sales growth of 3.8% in the initial eight weeks of the new financial year.