Britain’s two largest pub groups have warned that consumers will have to pay more for food and see less discounts on menus as they struggle to absorb rising energy and food costs.
Pub and restaurant group Mitchells & Butlers, which operates pub chains, including O’Neill, and restaurant brands such as Harvester say it is facing a difficult trading environment. Its rival, Marston, says it is working to mitigate inflation through a combination of cost-cutting and “pricing strategies.”
Phil Urban, chief executive of Mitchells & Butler, said: “Cost headwinds present a significant challenge for the industry, particularly in utility, wage and food costs.
Mitchells & Butlers, which has 1,600 UK venues and also operates chains including All Bar One and Toby Carveri, predicts that costs for the full year will be about 11.5% higher than in 2019, raising the base from বেস 1.8bn to over bn 2bn. It has previously predicted that its costs could rise another 6% next year, depending on the volatility of the energy market.
The London-listed hospitality group says it has already purchased about 80% of the energy needed for this year and about 10% for next year.
Urban said the company had already raised some of its prices by about 3% in April, but chose not to introduce a “blanket price increase”.
“We tend to be a little bit more sophisticated than that; We try to protect entry dishes and entry products and we try to offer more premium offers to let people climb the ladder to the menu if they want. And by doing that, you can drive costs, ”Urban said.
Marston’s, which runs about 1,500 pubs, said it had reduced the number of meals and menus available at its locations, after a review which it said allowed it to be more confident in its pricing decisions. The company is also closing its food offer for its cheapest two-to-one.
Nevertheless, Marstons warns that higher spending will “inevitably” affect its full-year earnings. “We’re navigating our way through cost increases,” said Andrew Andrea, Marston’s chief executive. “The pub has remained the home of affordable socialization and has consistently proven its resilience in the face of economic challenges.”
Both Mitchells & Butlers and Marston’s have said they have not yet noticed that their customers are seeing cost reductions or less frequent visits, as the life crisis has begun to subside. “I will not be able to point to any change in behavior at this time,” Urban said.
“In previous recessions, the sector has proved to be fairly resilient because people tend to protect their social life and it is a more luxurious product that goes along the way. But it’s early days and we’re very aware that the utility bill is probably hitting right now. “
Other hospitality businesses have said they are currently exploiting higher costs, but have warned that this will cut their profits.
“Electricity has more than doubled, food is about 15%. [higher] And labor costs about 7% -8% [up]Clive Watson is chairman of City Pub Group, which operates 45 pubs in southern England and Wales.
“If we don’t raise the price of our food and drink – and we think it’s the right thing to do right now – then we’re going to take those costs on our chin,” Watson told BBC Radio 4. Today’s program.