Mitchells & Butlers, the company behind Toby Carvery, Harvester, and All Bar One, has raised prices on their menu due to anticipated additional costs of £130 million in the coming year, up from the £100 million incurred in the previous financial year. This increase is mainly attributed to the rise in employer National Insurance and minimum wage, along with higher food prices. The government recently announced a 4.1% minimum wage hike effective from April.
Chief Executive Phil Urban stated that the expected extra cost is mainly driven by the surge in beef and steak prices, with steak prices soaring 30%. Despite this, the company hopes costs will decrease in the future. Prices across menus and drinks have been raised by an average of 3.2% since October.
Mr. Urban emphasized that while prices have been increased, they cannot fully transfer the cost burden to customers, as excessively high prices could deter them from purchasing certain items like steak. To mitigate this, adjustments have been made in the menu offerings, reducing the number of steak and beef dishes and optimizing menu choices without compromising quality or portion size.
Despite the cost challenges, 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, such as a labor scheduling system and auto-ordering, to manage stock levels efficiently and reduce waste, in addition to energy-saving initiatives.
While like-for-like sales rose by 4.3% over the year, growth dipped to 3.2% in the final quarter, particularly affected by weaker trading in London and premium brand segments. Sales growth in the initial eight weeks of the new financial year stood at 3.8%.