𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

All Bar One owner Mitchells & Butlers has revealed it is facing extra costs of around £130 million in the year ahead from a soaring wage bill and rising food prices.

The group – which also owns brands such as Toby Carvery, Harvester and Miller & Carter – said the cost hike was largely being driven by April’s national insurance contribution and minimum wage hike, with a further above-inflation rise in the minimum wage set for this year.

Food price inflation is also hitting the pub group, with meat costs in particular jumping higher, it said.

Mitchells added that the additional bill of about £130 million also includes its “preliminary assessment of the impact of the Chancellor’s recent autumn Budget”, but did not outline what the impact of that would be.

The Government announced earlier this week that the minimum wage will jump by another 4.1% from April.

The Budget delivered a further blow to many firms such as pubs, restaurants and small shops, which are all expected to see their property tax payments surge from the next financial year.

The Government confirmed a current 40% discount for retail, hospitality and leisure businesses – which is capped at £110,000 per business – will end on March 31 next year, to be replaced by a new system from the next financial year, which will see rates multipliers for retail, hospitality and leisure firms set 5p lower than the standard rate with no cap in support.

However, analysis from experts indicated the change and an increase in rateable values for most pubs will result in a sharp annual increase.

Chief executive Phil Urban said: “As we look to the year ahead, we anticipate increased cost pressures across the sector.

“However, we remain confident in our ability to manage these challenges through our established Ignite improvement programme and disciplined capital investment strategy.”

It came as the firm reported pre-tax profits rising by a fifth to £238 million in the year to September 27, despite an extra £100 million of costs already impacting the business from April’s wage expenses.

Like-for-like sales were up 4.3%, though it saw growth slip to 3.2% in the final quarter due to weaker trading in and around the London area and in more premium brands.

Sales growth stood at 3.8% in the first eight weeks of the new financial year.

The firm has been taking action to make savings in the face of cost headwinds, including through a labour scheduling system and auto-ordering to keep stock levels in check and minimise waste, alongside energy saving measures.