Mitchells & Butlers, the company behind Toby Carvery, Harvester, and All Bar One, has recently increased prices on its menu in response to anticipated additional costs of £130 million in the upcoming year, compared to the £100 million in the previous financial year.
The price hike is mainly a result of the recent rise in employer National Insurance and minimum wage, along with increased food price inflation. The government’s announcement of a 4.1% minimum wage increase from April further contributed to the cost pressures.
Phil Urban, the CEO of Mitchells & Butlers, highlighted that a significant portion of the expected extra costs is driven by the surge in beef and steak prices. Despite a 30% increase in steak prices, the company is hopeful that costs will normalize in the coming year. Urban mentioned that they have raised prices by an average of 3.2% on menus and drinks since October.
To manage the impact on customers, the company has made strategic adjustments, such as reducing the number of steak and beef dishes in non-core product areas rather than compromising on quality or portion size. Mitchells & Butlers reported a 20% increase in pre-tax profits to £238 million for the year ending September 27, despite the additional costs incurred due to wage bill increases in April.
The company has implemented cost-saving measures, including a labor scheduling system and auto-ordering to optimize stock levels and reduce waste, in addition to energy-saving initiatives. While like-for-like sales grew by 4.3% over the year, the growth rate dipped to 3.2% in the final quarter, influenced by weaker trading in London and premium brand segments. Sales growth has been recorded at 3.8% in the initial eight weeks of the new financial year.