Mitchells & Butlers, the owner of All Bar One and Toby Carvery, has warned it faces approximately £130m in additional costs over the next year due to soaring wage bills and rising food prices. The pub and restaurant group said the cost increases are largely driven by April’s increases to the minimum wage and employers’ national insurance contributions, with food costs, particularly for meat, also contributing.
The extra bill includes a preliminary assessment of the impact of the recent budget, which raised the national living wage to £12.71 for over-21s and increased the minimum wage for 18- to 20-year-olds by 8.5% to £10.85 an hour. Chief Executive Phil Urban commented: “As we look to the year ahead, we anticipate increased cost pressures across the sector. However, we remain confident in our ability to manage these challenges.”
Despite the cost warning, Mitchells & Butlers’ shares rose more than 10% as the group reported strong full-year results. Revenues reached £2.7bn for the year to 27 September, up from £2.61bn in 2024, with pre-tax profits increasing 20% year-on-year to £238m. Food and drink sales grew 4.3% year on year, and by 3.8% in the first eight weeks of the new financial year, ahead of last year’s pre-Christmas performance.
Separately, shares in Premier Inn owner Whitbread slumped over 5% after analysts at Bernstein issued a double downgrade and warned of a “hammer blow” from business rate changes in the budget. Bernstein examined 67 Premier Inn hotels and found a median increase in rateable value of about 174%, with most properties above the £500,000 threshold receiving no relief. The Manchester Piccadilly Premier Inn, for example, faces a 385% increase.
Bernstein estimated the overall impact on Whitbread’s pre-tax profits could be up to £30m in the first year, £90m in the second, and £140m in year three. Analysts at Citi also downgraded Whitbread, estimating that around 110 hotels would be affected by the upward revaluation, costing about £43m a year. Citi noted that by 2029, when the full impact stabilises, adjusted profits could fall by approximately 5%.
