The boss of one of the UK's largest pub and restaurant groups has issued a stark warning that customers will face higher menu prices as the company grapples with an additional £130 million in costs.
Soaring costs force price increases
Phil Urban, chief executive of Mitchells and Butlers, revealed on Friday, 28 November, that the group has already increased average prices across its food and drink menus by 3.2 per cent since the start of October. The company, which owns popular chains including All Bar One, Harvester, and Toby Carvery, is confronting a perfect storm of rising expenses.
The most significant pressure comes from the rocketing price of beef, a core ingredient for its Toby Carvery restaurants and the Miller & Carter steakhouse chain. Official figures show beef price inflation surged to 27.5 per cent in the year to October, adding an estimated £30 million to the group's costs this year alone.
Steak menus under pressure
Mr Urban explained the delicate balance the business must strike. He stated that the group cannot simply pass all the increased costs onto customers, as they "just wouldn't eat steak" if prices became too high. This has led to strategic menu changes across the estate.
"Some of our competitors have taken steak off the menu entirely," Urban said. "Where steak is not the core product, we have reduced the number of steak and beef dishes or re-engineered the menu." He was adamant, however, that the company would not compromise on quality or portion sizes.
The CEO expressed hope that the dramatic rise in beef prices might be a temporary "blip," with costs potentially falling again in the next year or so. He indicated that growth in the group's other brands could help offset the challenges faced by its steak-focused outlets.
Budget impact and customer sentiment
The projected £130 million increase in costs for the period up to next September also includes an initial assessment of the impact of measures announced in the Chancellor's recent Autumn Budget. This encompasses rising wage bills alongside other inflationary pressures.
Commenting on the post-Budget outlook, Mr Urban suggested a short-term boost in consumer confidence. He observed that people seem "relieved that it's come and gone," and predicted they would "go out and enjoy themselves and worry about it in January."
The warning from Mitchells and Butlers highlights the ongoing strain on the UK's hospitality sector, with major operators being forced to make difficult decisions between absorbing costs and raising prices for consumers.
