All Bar One and Miller & Carter owner Mitchells & Butlers warns of price rises as soaring costs bite
The pub and restaurant group, which also owns brands including Harvester and Browns, said it is facing pressure from rising gas and electricity prices as well as food and staff costs amid supply and worker shortages.
The company said it is seeking to mitigate the cost increases “as far as possible” through an ongoing overhaul and tight control of the business.
But it added: “There will inevitably be a residual impact on the current financial year's performance.”
Chief executive Phil Urban said the group will need to put up prices for customers to counter the cost hikes, but stressed that increases will not be “eye-watering”, with the company largely looking to make savings elsewhere.
He is repositioning businesses under a turnaround plan, called Ignite, ramping up its delivery offer as well as automating supply and staff roster systems.
The cost warning takes the shine off figures showing a rebound across the group, which reported sharply narrowed pre-tax losses of £42 million for the year to September 25, against losses of £123m the previous year.
Like-for-like sales declined by 9.6 per cent over the full year, though M&B said it has seen a return to sales and profit growth since pandemic restrictions eased during the summer.
In the eight weeks since its year-end, like-for-like sales have risen 2.7 per cent on pre-pandemic levels, though it said sales by volumes remain in decline - of between 10 per cent and 15 per cent - with trading boosted by increases in spend per head and reduced VAT on food and non-alcoholic drink.
M&B, which also runs scores of well-known Scottish watering holes including Edinburgh’s historic Sheep Heid Inn, has seen its energy costs double in recent months, while it has faced extra costs from an acute driver shortage.
The group has put in place measures to ensure it has enough drivers between depots and pubs, but Urban said it will be a “rocky road” over the peak festive season.
He added: “The trading environment remains challenging and cost headwinds continue to put pressure on the sector.
“However, we have strengthened our balance sheet and returned to profitability and cash generation.”
Richard Hunter, head of markets at investment platform Interactive Investor, said: “Pubs and restaurants were in the eye of the pandemic storm and their fortunes fluctuated accordingly.
“For Mitchells & Butlers, a fair proportion of the year was viewed from behind locked doors with lockdowns in place.
“The group has a number of factors in its favour, which should promote optimism on a continuing recovery.”
Matt Britzman, equity analyst at Hargreaves Lansdown, noted: “Ultimately investors will need to remain patient.
“The group’s agreed not to return any cash until at least January 2023, which should mean the balance sheet continues to improve even if capital expenditure rises. But there’s a long road ahead, and progress needs to continue over what could be a tough winter period.”