Subscribe Login
Pub/Bar/Nightclub

Pub Group Mitchells & Butlers Flags Mounting Cost Pressures After Profit Jump

By Dave Simpson

Mitchells & Butlers Plc said on Wednesday 7 December recent sales in the new fiscal year were encouraging, but the British pub and restaurant group flagged challenges arising from surging energy and labour costs, after posting a 53% jump in annual profit.

Details

The Birmingham-based group's warning on expenses comes at a time when a worsening cost-of-living crisis is forcing Britons to limit spending, while a sharp rise in energy bills and raw materials squeezes margins for restaurants and pubs.

""The trading environment remains highly challenging, with cost inflation continuing to put pressure on margins and we are ever mindful of the pressures that the UK consumer is facing," chief executive officer Phil Urban said in a statement.

Get a FREE Digital Subscription!

Enjoy full access to Hospitality Ireland, our weekly email news digest, all website and app content, and every digital issue.

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our Terms & Conditions and Privacy Policy

In the 10 weeks since the end of its fiscal year on 24 September, Mitchells said sales climbed 6.5% on a like-for-like basis from the year-ago period and 9.2% over the corresponding phase in the pre-pandemic fiscal year 2019.

Profit

The owner of the Toby Carvery, Harvester and All Bar One brands said annual operating profit grew to £124 million, while pre-tax profit came in at £8 million, compared to a loss of £42 million a year earlier.

UPDATE 2-UK's Mitchells & Butlers Tweaks Menus To Tackle Costs

The above news was followed by the following update:

Mitchells & Butlers said on Wednesday 7 December it would tweak menus and try to reduce energy use, as the British pub and restaurant group seeks to limit the impact of surging costs after sales rebounded to exceed pre-pandemic levels.

Shares in the company, which runs more than 1,700 restaurants and pubs in Britain under brands including Harvester and All Bar One, rose about 8% after it reported a 53% jump in annual operating profit to £124 million.

Following this year's high energy prices as a result of the Ukraine war, Mitchells & Butlers also said it was seeking to cut electricity use and was putting chemical additives into its heating systems to reduce gas consumption.

"The trading environment remains highly challenging, with cost inflation continuing to put pressure on margins and we are ever mindful of the pressures that the UK consumer is facing," CEO Phil Urban said.

"In the current situation where food costs are at such elevated levels, we are quite agile in the way we do our menus," Urban told Reuters.

For example, when prices of lamb were high, M&B's Toby Carvery brand took it off its menu before bringing it back when costs eased, Urban said.

It has also replaced expensive garnishes with cheaper ones.

In the 12 months to October, prices of food and non-alcoholic beverages rose at the fastest rate since 1977, Britain's Office for National Statistics said last month.

M&B had raised its prices of food at its pubs by 5%, less than inflation of over 10%.

Sales in the first 10 weeks of this financial year were up 6.5% on a like-for-like basis from the year-ago period, and 9.2% over the corresponding phase in the pre-pandemic fiscal year 2019, the company said.

Stifel analysts in a note said the continued recovery of sales was encouraging.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

Enjoy a FREE Digital Subscription
Enjoy full access to Hospitality Ireland, our weekly email news digest, all website and app content, and every digital issue.
Enjoy a FREE Digital Subscription
Enjoy a FREE Digital Subscription
Enjoy full access to Hospitality Ireland, our weekly email news digest, all website and app content, and every digital issue.
Enjoy a FREE Digital Subscription