Rising inflation is putting the heat on the owners of Miller and Carter steak house chain, its boss has warned.
Mitchells & Butlers, which owns the steak restaurants as well as the All Bar One brand, has warned that soaring inflation is continuing to harm trade – and shows no sign of easing.
The alert published in a third quarter trading update to the London Stock Exchange came a day after official figures confirmed that the rate of inflation had hit the highest level in more than 40 years.
The Consumer Prices Index (CPI) rose by 9.4% in the 12 months to June, up from 9.1% in May, according to the Office for National Statistics (ONS). The rise was driven by ever increasing prices for motor fuels and food causing challenges for consumers and businesses alike.
Mitchells & Butlers, which owns around 1,500 pubs across the UK, told investors that sky-high utilities, wages and food costs are expected to “persist at or above current levels well into the next financial year”.
For how long will costs keep rising?
In the statement, the firm said: “Inflationary cost pressures continue to present a major challenge to our business and to the hospitality sector as a whole.
“Whilst the near-term outlook is unchanged it now seems likely that, particularly in the case of utilities, wages and food costs, these will persist at or above current levels well into the next financial year, increasing and prolonging the medium term impact on margins.”
Phil Urban, chief executive of the firm which also owns Toby Carvery, said: “The trading environment remains very challenging with inflationary costs squeezing consumer discretionary spending and putting pressure on the industry’s margins.”
Nevertheless, M&B said it saw strong like-for-like sales at the start of the quarter to July 16, rising 2.2%.
However, it said this fell back over the remaining weeks amid the Jubilee weekend, industrial action and the recent very hot weather, taking total sales growth for the period to 0.9%.
The rise was driven by food sales after a 1.3% fall in the company’s drink trade.
Mr Urban added it would maintain a program of investment and cost control known as ‘Ignite’ that currently means the company has not yet passed on cost rises to consumers.
He said: “In the face of these challenges, we remain focused on driving sales and efficiency through our Ignite programme and pushing forward with our capital investment plan which we are pleased to see delivering strong sales uplifts.”
The firm remains confident that its focus on initiatives that “enhance efficiency and productivity” will helping to offset inflationary cost pressures.
The FTSE-250 pub giant’s confidence is not reflected across the sector.
New research commissioned by digital energy services company, eEnergy recently found that business leaders in the hospitality and leisure sector are already starting to suffer the impacts of the energy price crisis, with a quarter of bosses considering closure in the next 12 months.
