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, up from the £100 million in the previous financial period.
The rise in costs is primarily attributed to the recent increase in employer National Insurance and minimum wage, along with escalating food prices. Following the government’s announcement of a 4.1% minimum wage hike from April, Phil Urban, Mitchells & Butlers’ CEO, highlighted that a significant portion of the expected £30 million increase in costs is driven by soaring beef and steak prices.
Despite a 30% surge in steak prices, the company is hopeful that costs will normalize in the coming year. Urban mentioned that prices across menus and drinks have been raised by an average of 3.2% since early October. However, the company is cautious about passing on the full extent of cost pressures to customers, as excessively high prices could deter them from purchasing steak-related items.
While competitors have completely removed steak from their menus, Mitchells & Butlers has opted to either reduce the number of steak dishes or rework the menu to mitigate cost impacts. Urban emphasized the company’s commitment to maintaining meat quality and portion sizes while striving to balance cost increases without burdening customers.
Despite facing additional costs, 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 optimizing labor scheduling, auto-ordering to manage stock levels efficiently, and adopting energy-saving initiatives.
Although like-for-like sales saw a 4.3% growth for the year, the final quarter saw a slight dip to 3.2% due to weaker trading in London and premium brand segments. Sales growth in the initial eight weeks of the new financial year stood at 3.8%.