Mitchells & Butlers, a pub operator, has warned that its yearly energy costs will nearly quadruple from pre-pandemic levels.
The owner of All Bar One and Toby Carvery predicted that energy expenditures for the previous fiscal year would total £150 million, compared to £80 million for the year ending September 2019.
In addition, it cautioned that energy costs will continue to rise this year despite the Government’s upcoming energy bill reduction scheme for businesses, which is scheduled to begin in October and extend for six months.
In the past year, the hospitality industry in the United Kingdom has been subjected to steadily increasing pressure from increased costs, having previously been severely impacted financially by pandemic-related lockdown restrictions.
M&B, based in Birmingham, reported that inflationary pressures initially led to higher salary and food expenses in the second part of the preceding fiscal year, before spreading across the majority of its supply chain.
Despite a decline in drink orders, the FTSE 250 company’s like-for-like revenue grew by 1.5% in the fourth quarter mainly to food sales.
Trade was negatively impacted by the summer warmth and rail strikes, although the company reported “encouraging” demand over the August Bank Holiday weekend and excellent results from its luxury food-led businesses.
This did not prevent the group’s overall annual revenues from falling 1.3% due to temporary site closures following the introduction of the Omicron variant last winter and the sale of several venues.
During early morning trade, Mitchells & Butler’s shares fell 6.4% to 126.5p, indicating that their value has decreased by approximately 47% over the past year.
As increased energy and fuel costs compress the disposable budgets of millions of Britons, the hospitality industry is extremely anxious that the cost-of-living issue will result in a decline in sales.
Phil Urban, chief executive officer of M&B, stated, “The trade situation for the hospitality sector is extremely challenging, with cost inflation exerting increasing pressure on margins, and we are also cognizant of the challenges on the UK consumer in the coming months.
Yesterday, his counterpart at Shepherd Neame, Jonathan Neame, warned that the Kentish brewer and pub owner will likely experience a decline in sales this winter due to rising fuel and energy costs.
Name noted that inflationary pressures would make it more difficult for Britain’s oldest brewer to return to pre-pandemic levels of profitability.
Victoria Scholar, head of investment at Interactive Investor, stated, “With a UK recession anticipated and consumer confidence decreasing, discretionary spending is likely to struggle, with reduced demand for restaurants and bars to follow.
