All Bar One and Toby Carvery owner Mitchells & Butlers reveals annual power bill rose to around £150m, warns it’s set to rise again
- Mitchells & Butlers owns the Toby Carvery, Harvester and O’Neill pub chains
- The FTSE 250 company has also been affected by rising wages and food costs
- M&B blamed summer heat and rail strikes for hurting sales in recent weeks
Pub operator Mitchells & Butlers has warned that its annual energy costs are forecast to be nearly double pre-pandemic levels.
All Bar One owner and Toby Carvery said overall energy costs for the latest financial year would be around £150m, compared with £80m in the 12 months to September 2019.
He further warned that energy costs would continue to rise this year despite the Government’s incoming power bill relief plan for businesses, which will last for six months from October.
Prices: Toby Carvery owner M&B said overall power costs for the latest financial year would be around £150m, compared with £80m in the 12 months to September 2019
Britain’s hospitality sector has come under increasing pressure in the last year from rising bills as it has already been hit financially by pandemic-related lockdown restrictions.
Birmingham-based M&B said inflationary pressures had initially led to higher wages and food costs in the second half of the recent fiscal year before spreading throughout most of its supply chain.
The FTSE 250 company still managed to see comparable revenue growth of 1.5 percent in the fourth quarter, thanks to food sales offsetting a drop in beverage orders.
The trade was hit by the summer heat wave and rail strikes, but noted “encouraging” demand over the August bank holiday weekend and strong performance from its food-led premium brands.
This did not prevent the group’s total annual sales from falling 1.3 percent due to the temporary closure of sites following the appearance of the Omicron variant last winter and the sale of certain locations.
Mitchells & Butlers Stock It fell 6.4 percent to 126.5 pence during morning trading, meaning its value has dropped roughly 47 percent in the past year.
Companies in the hospitality industry are very concerned that the cost of living crisis will lead to a decline in sales as fuel and utility bills increase disposable income for millions of Britons.
Phil Urban, CEO of M&B, said: “The business environment for the hospitality sector remains very challenging, with cost inflation putting increasing pressure on margins, and we are also aware of the pressures on the UK consumer. United in the coming months.”
His counterpart at Shepherd Neame, Jonathan Neame, warned yesterday that the Kentish brewer and pub owner would likely see sales weaken this winter due to rising fuel and energy prices.
Neame added that inflationary tensions would mean it would take longer for the company, Britain’s oldest brewer, to return to pre-pandemic levels of profitability.
Victoria Scholar, chief investment officer at Interactive Investor, said: “With expectations of a UK recession and falling consumer confidence, discretionary spending is likely to struggle with weaker demand for restaurants and bars to come. “.