All Bar One owner Mitchells & Butlers has flagged up concerns over rising costs due to tax changes announced in Labour's first Budget at the end of October.
The Birmingham-headquartered hospitality firm discussed these issues within its full-year results for the period ending 28 September 2024, which were released this morning, as reported by .
The company reported a 5.3 per cent increase in like-for-like sales, outperforming the overall market. Operating profit soared from £98m in 2023 to £300m in 2024, bolstered by higher sales and reduced costs.
However, the group cautioned that amendments to the National Living Wage and employer national insurance contributions would lead to a "sharp" escalation in wage costs. The firm anticipates cost headwinds of approximately £100m this financial year, marking an increase of just over five per cent on its current cost base.
The most substantial additional cost is expected to be wage expenses stemming from the Autumn budget measures. Chief executive Phil Urban commented that despite facing "increased inflationary cost headwinds in the year ahead", the company will "remain focused on [its] established Ignite programme of initiatives and our successful capital investment programme, to drive further cost efficiencies and increased sales."
"Coupled with our market-leading estate and customer offers, we are confident that this will enable us to further grow market share and secure continued long-term outperformance," stated Urban. The company anticipates sales growth to be driven by price and spending per head, despite expecting volumes to decline in the low single digits.
It acknowledged that cost pressures during and post-pandemic had led to a "widespread and unavoidable increase in prices", resulting in one per cent of pubs and restaurants closing by June 2024. In total, 15 per cent of venues have been lost since 2020.
"As we move into 2025 we expect more normalised levels of sales growth as the inflationary environment eases. Notwithstanding future cost increases we feel that the business is in very good shape."
The firm added: "Our balance sheet continues to strengthen, with reduced debt and a substantially de-risked pension surplus, and we expect to out-perform the market driving further profit growth in the year ahead."
