All Bar One owner M&B warns of price rises due to Budget cost woes
Mitchells & Butlers is facing around £23 million a year in extra costs from the rise in national insurance contributions alone.
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Your support makes all the difference.All Bar One owner Mitchells & Butlers (M&B) has become the latest business to warn of price rises after Budget measures as it revealed costs will soar by around £100 million next year.
The group, which also owns brands including Toby Carvery, said higher wage expenses are “by far the most significant increase” in its cost base following moves announced in last month’s Budget.
Chief executive Phil Urban told the PA news agency M&B is facing around £23 million a year in extra costs from the rise in national insurance contributions alone, with the increase in the minimum wage also sending its wage bill surging.
Having good service is critical
In total, its costs will rise by around 5%, or £100 million, in 2024-25 and Mr Urban said the group’s prices are likely to have to increase as part of efforts to mitigate extra expenses.
He told PA that prices are already expected to rise across the sector next spring, but added “we’ll probably have to go harder to cover the latest cost increases”.
He said the group – which employs about 45,000 people – will look at prices on a “site by site basis”, but stressed there are no plans to rein in recruitment or cut jobs.
“Having good service is critical,” he said.
Mr Urban’s comments came as M&B’s annual results showed it swung to a pre-tax profit of £199 million for the year to September 28, against losses of £13 million the previous year, with like-for-like sales up 5.3%.
Underlying earnings jumped 41.2% to £312 million on a pro-rata 52-week basis.
The group said like-for-like sales growth had eased to 4% in the first seven weeks of the new financial year, adding it expects “more normalised levels of sales growth as the inflationary environment eases”.
But M&B added a note of caution: “In the year ahead, the main uncertainties facing the group are considered to be the maintenance of sales growth in the face of pressure on consumer spending power, and the rate of cost inflation.
“The outlook for these is uncertain and will depend on a number of factors, including consumer confidence, global political developments, supply chain disruptions and government policies.”