Two of Britain's largest pub groups have warned that customers may face higher prices and fewer discounts as they struggle with rising energy, food, and wage costs. Mitchells & Butlers, which operates chains including O'Neill's, Harvester, and Toby Carvery, said it was facing a difficult trading environment, while Marston's reported it was phasing out its cheapest two-for-one meal offer.
Mitchells & Butlers chief executive Phil Urban said cost headwinds presented a significant challenge, particularly for utilities, wages, and food. The company forecast its full-year costs would be about 11.5% higher than in 2019, lifting its cost base above £2bn from £1.8bn. It predicted costs could rise another 6% next year, depending on energy market volatility. The group has already bought about 80% of its energy for this year and 10% for next year.
Urban said the company had increased some prices by about 3% in April but avoided blanket rises, instead protecting entry dishes and offering premium options. Marston's, which runs about 1,500 pubs, has reduced the number of dishes and menus after a review and is phasing out its two-for-one offer. Chief executive Andrew Andrea said higher costs would inevitably impact full-year earnings, but added that pubs remain a home of affordable socialising.
Both groups said they had not yet seen customers cutting back, but other hospitality businesses reported absorbing costs at the expense of profits. Clive Watson, chair of the City Pub Group, said electricity costs had more than doubled, food was up 15%, and labour costs rose 7-8%, but they were not raising prices at the moment.
