Mitchells & Butlers ‘in good shape’ as it prepares for spike in labour costs

Mitchells & Butlers has said the pub group is “in good shape” as it prepares for a 5% increase in its cost base, following budget announcements.

In its financial results for the year to 28 September 2024 the pub group, which includes the All Bar One, Harvester, O’Neills and Miller & Carter Steakhouse brands, reported like-for-like sales growth of 5.3%.

Revenues for the year stood at £2.6b, compared to £2.5b the previous year. Operating profits saw a 41.2% year-on-year uptick to £312m. Profits before tax stood at £199m, compared to a loss of £13m in 2023. 

The pub group said it had also seen a strong start to 2025 financial year, with like-for-like sales up 4% in the first seven weeks of the reporting period.  

However, Mitchells & Butlers anticipates that its cost base will increase by 5%, reaching £100m next year following increases to the National Living Wage and employer National Insurance contributions.

Chief executive, Phil Urban, said: “We are delighted by the very strong performance during the year. Like-for-like sales continued to outperform the market which, coupled with easing inflationary costs and focus on efficiencies, has resulted in very strong profit recovery.

“We face increased inflationary cost headwinds in the year ahead. However, we shall remain focused on our 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.”

The business said that while labour costs were set to increase dramatically, other costs have “generally returned to more normalised levels and gas and electricity costs in particular have been in deflation”.

Mitchells & Butlers’ latest results continue a positive trajectory for the year, with a 5.7% sales uptick in Q3.

In May, the company acquired the 10-strong Italian restaurant group Pesto Restaurants.