Mitchells & Butlers warns of ‘cost headwinds’ blowing its way as wage bill soars

Pub carvery

Mitchells & Butlers has warned shareholders that it faces a growing number of “cost headwinds” moving forward, with the size of its wage bill set to soar.  

The group, which employs 44,000 staff on the UK, admitted yesterday that margins for the full year will be below last year, particularly as a result of acceleration of investment in the estate and wage inflation following the introduction of the National Living Wage in the second half.

CEO Phil Urban said the company is prepared for what is coming its way. “We enter the new financial year facing an increasing number of cost headwinds, most notably labour. However, based on recent progress we remain committed to our strategy going forward,” he said.

Total sales in the first 51 weeks of the financial year fell by 0.8%, but like-for-like sales in the last eight weeks have shown an improvement of 1.8%.

Urban said the growth represented a continuation of the improved trend both over time and relative to the total eating-out market, supported by favourable weather in recent weeks.

“We continue to generate good sales growth from our invested sites, now starting to be underpinned by relative improvement in the performance of sites without recent investment,” he said.

So far this financial year Mitchells & Butlers has converted or remodelled 244 sites, and opened seven new sites.

“We are encouraged by our improved trading performance in recent months,” said Urban. “Weather in recent weeks has certainly been helpful to sales, but in addition we are starting to benefit from increased investment activity, instilling a commercial culture and a faster pace of execution and innovation in our business.”

Mitchells & Butlers operates a number of brands and formats, including Harvester, Toby Carvery, All Bar One, Miller & Carter, Premium Country Pubs, Sizzling Pubs, Crown Carveries, Vintage Inns, Browns, Castle, Nicholson’s, O’Neill’s and Ember Inns.

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