Pub powerhouses Mitchells & Butlers and Fuller, Smith & Turner have both expressed optimism as they adjust to higher wage bills, a positive indicator for an industry that sounded the alarm of crisis last year.
Mitchells, which owns Harvester, Toby Carvery and All Bar One, reported like-for-like growth of 10.4 per cent over the key festive three-week period, built on "numerous record sales performances through the estate and the brand portfolio", as reported by .
The company, employing just under 50,000 staff across its 1,784 locations, is facing £100m of year-on-year cost increases, "primarily driven by increased labour costs".
However, Phil Urban, chief executive of Mitchells, anticipates the chain "to deliver continued profit growth and market outperformance".
Fullers reported like-for-like sales growth of 10.2 per cent over the five-week Christmas and New Year period, with a "consistent performance across all parts of the estate". Like-for-like sales for the 41 weeks to 11 January 2025 were up 5.9 per cent.
Simon Emeny, Fullers' chief executive, stated the firm remained "confident of meeting market expectations for the full year". Fullers is facing £8m in labour costs, with £3m attributed to the rise in employer’s national insurance and £5m due to wage increases.
The chain owns or leases just under 400 pubs and employs 5,500 staff.
Following the budget, shares in Mitchells & Butlers plummeted by 13 per cent, marking the largest drop among major hospitality firms, while Fullers saw a seven per cent decrease. However, this morning, shares rebounded by five per cent and 1.5 per cent respectively.
Hospitality companies have been outspoken about the detrimental impact of tax increases on the sector. Over 200 of the º£½ÇÊÓƵ's leading hospitality businesses penned a letter to the Chancellor in November, cautioning that the additional tax burden could push some firms into liquidation, while others may need to significantly cut their workforce and reduce investment to cover the extra costs.
The budget changes were labelled as "a direct attack on those labour-intensive industries that are the lifeblood of our economy" by Fuller’s chair, Michael Turner. "The unintended consequences of these actions will be to drive inflation higher, put pressure on wages, and will drive many businesses to the wall," Turner commented last year.
Despite warnings that cost increases could eliminate the profit necessary for reinvestment, both companies affirmed they will continue to prioritise it. Fullers revealed it has "a number of major projects planned for the final quarter of the current financial year, including a £4 million investment at The Chamberlain Hotel in the City of London, which is already underway."
Mitchells and Butlers have finalised the acquisition of 5.7 million shares out of the proposed 6.5 million in its buyback scheme. Mitchell’s Urban commented: "Our focus remains on the effective execution of our Ignite programme of initiatives and our successful capital investment programme, driving cost efficiencies and increased sales."
"We continue to leverage the strength of our diverse portfolio of established brands and enviable estate locations and believe we are well positioned to further grow profitability and market share in the year ahead."
