Mitchells & Butlers, the parent company of popular dining establishments such as Toby Carvery, Harvester, and All Bar One, has recently increased prices on its menu due to anticipated additional costs amounting to £130 million in the upcoming fiscal year, up from £100 million in the previous year.
The rise in costs is primarily attributed to the recent hike in employer National Insurance and minimum wage, alongside increased food price inflation. Following the government’s announcement of a 4.1% minimum wage increase effective from April, Phil Urban, the CEO of Mitchells & Butlers, noted that a significant portion of the expected £30 million cost surge is driven by the escalation in beef and steak prices.
Despite a 30% surge in steak prices, the company remains hopeful that costs will normalize in the coming year. Urban disclosed that average prices across their menus and beverages have been raised by 3.2% since early October. However, he emphasized the challenge of transferring the full burden of cost pressures to consumers, as excessively high prices could deter customers from purchasing steak dishes.
While maintaining the quality and portion size of their offerings, Mitchells & Butlers has strategically adjusted their menu, reducing the number of steak and beef options where necessary. Despite the cost challenges, the company reported a 20% increase in pre-tax profits to £238 million for the year ending September 27, showcasing resilience amidst the wage bill escalations earlier in the year.
To counter cost pressures, the firm has implemented efficiency measures such as a labor scheduling system, auto-ordering to optimize stock levels, and energy-saving initiatives. Although like-for-like sales rose by 4.3% over the year, growth tapered to 3.2% in the final quarter, mainly due to subdued trading in London and within premium brands. Nonetheless, sales growth rebounded to 3.8% in the initial eight weeks of the new fiscal year.