Pub Giant Faces Soaring Costs
The parent company of popular UK pub chains including Toby Carvery and Miller & Carter has been forced to increase menu prices across its estates. Mitchells & Butlers (M&B), which also operates All Bar One and Harvester, is confronting an additional £130 million in costs for the year ahead, a significant jump from the £100 million extra costs faced in the previous financial year.
Steak Price Crisis Hits Restaurants
Chief Executive Phil Urban revealed that a 30 per cent surge in steak prices has created a 'perfect storm' for the group's eateries. This has particularly impacted the Miller & Carter steakhouse chain, which Mr Urban admitted would 'go backwards this year' as a result. The company has implemented an average 3.2 per cent price increase on food and drinks since October to help offset these pressures.
Mr Urban explained the delicate balance the company must strike, stating they cannot pass the full cost increase to customers who 'just wouldn't eat steak' if prices became too high. While some competitors have removed steak from their menus entirely, M&B has chosen to reduce the number of steak and beef dishes on menus where it isn't the core product. However, Mr Urban committed to maintaining quality, asserting 'What I won't do is change the quality of the meat or the portion size.'
Budget Changes and Consumer Confidence
The £130 million cost assessment also includes the preliminary impact of the Chancellor's recent autumn Budget. The government's announcement of a 4.1 per cent increase in the national minimum wage from next April, alongside expected property tax surges, adds further pressure. Mr Urban described the property tax changes as 'super disappointing' for the sector, though he noted larger groups like M&B would face only a 'modest increase' compared to smaller operators.
Despite these challenges, M&B reported pre-tax profits rising by a fifth to £238 million for the year to September 27. The company has implemented various cost-saving measures, including a labour scheduling system, auto-ordering to control stock levels, and energy-saving initiatives. Like-for-like sales grew by 4.3 per cent over the year, though growth slowed to 3.2 per cent in the final quarter, partly due to weaker trading in London and premium brands.
Mr Urban noted that consumer confidence had been affected in the run-up to the Budget, with many people feeling 'unnerved' by pre-announcement speculation. However, he expressed optimism that now the Budget has passed, consumers will feel 'relieved that it's come and gone' and likely 'go out and enjoy themselves and worry about it in January.' The executive remains hopeful that the steak price inflation represents a temporary 'blip' and expects costs to decrease within the next year.
