Two of Britain’s largest pub groups have warned that customers may have to pay more for meals and see fewer discounts as they struggle to absorb rising energy and food costs. Mitchells & Butlers, which runs O’Neill’s and Harvester, said it was facing a difficult trading environment, while rival Marston’s said it was working to mitigate inflationary pressures through cost-cutting and “pricing strategies”.
Mitchells & Butlers, which has 1,600 UK venues including All Bar One and Toby Carvery, forecast that its full-year costs would be about 11.5% higher than in 2019, lifting its cost base above £2bn from £1.8bn previously. The company said it had already bought about 80% of the energy it will need this year and 10% of next year’s requirement, but warned costs could rise another 6% depending on energy market volatility.
Chief executive Phil Urban said the company had increased some prices by about 3% in April but had avoided “blanket price rises”. “We try to protect entry dishes and entry products and we try to put more premium offers on to allow people to ladder up through the menu if they want to,” he said.
Marston’s, which runs about 1,500 pubs, said it had reduced the number of dishes and menus available after a review that gave it more confidence in pricing decisions. The company is also phasing out its cheapest two-for-one food offer. Chief executive Andrew Andrea said higher costs would “inevitably” have an impact on full-year earnings, but added: “The pub remains the home of affordable socialising and has continually proven its resilience in previous times of economic challenge.”
Both groups said they had not yet noticed customers cutting back on spending or visiting less frequently. “I wouldn’t be able to point to any change in behaviour at the moment,” said Urban. Clive Watson, chair of the City Pub Group, which runs 45 pubs, said electricity costs had more than doubled, food was up about 15% and labour costs 7-8%, but his firm was not raising prices and would “take these costs on the chin”.
