Surging steak prices deliver cost hit for Toby Carvery owner

Toby Carvery owner Mitchells & Butlers has hiked prices across its menu as the pub group warned the surging cost of steak would help push up its costs by around another £30 million this year.

The group said steak prices had raced 30% higher, which is particularly impacting its Toby Carvery eateries and Miller & Carter steak restaurants chain.

Phil Urban, chief executive of Mitchells & Butlers (M&B), told the Press Association the group had raised prices by 3.2% on average across its menus and drinks since the start of October to offset the hit and other cost pressures.

The group – which also owns brands such as All Bar One and Harvester – warned it is set for additional costs of around £130 million in the year ahead from a soaring wage bill and the rising beef prices.

This compares with extra costs of about £100 million in the past financial year, which came after April’s national insurance contribution and minimum wage hike, as well as food price inflation.

Mr Urban said the additional £30 million was largely being driven by the jump in beef and steak prices.

But he said the group cannot pass on the full hit of its cost pressures to customers, who “just wouldn’t eat steak” if prices became too high.

He told PA the Miller & Carter brand would “go backwards this year” due to the steak price hike, but added that M&B can offset the hit through growth in its other brands.

He said: “Some of our competitors have taken steak off the menu entirely.

“Where steak is not the core product, we have reduced the number of steak and beef dishes or re-engineered the menu.

“What I won’t do is change the quality of the meat or the portion size… and nor can we pass on all that (cost increase) on to the customer.”

Mr Urban said steak prices have gone up due to a “perfect storm” of impacts on beef supply in the UK and worldwide, but he expects it to be a “blip” and hopes costs will come back down in the next year or so.

M&B added that the additional bill of about £130 million for the year to next September also includes a “preliminary assessment of the impact of the Chancellor’s recent autumn Budget”.

The Government announced earlier this week that the minimum wage will jump by another 4.1% from April.

The Budget delivered a further blow to many firms such as pubs, restaurants and small shops, which are expected to see property tax payments surge from the next financial year.

Mr Urban said the property tax changes were “super disappointing” for the sector, but added that smaller players would bear most of the cost, with larger groups such as M&B facing a “modest increase”.

M&B’s full-year results on Friday showed pre-tax profits rising by a fifth to £238 million in the year to September 27, despite the extra costs of April’s wage bill increases.

The firm has been taking action to make savings in the face of cost headwinds, including through a labour scheduling system and auto-ordering to keep stock levels in check and minimise waste, alongside energy saving measures.

Like-for-like sales were up 4.3% over the year, but growth slipped to 3.2% in the final quarter due to weaker trading in and around the London area and in more premium brands.

Sales growth was 3.8% in the first eight weeks of the new financial year.

Mr Urban added that sales had been weighed on in the run-up to the Budget with many consumers “unnerved” by speculation in the weeks beforehand.

He said people are “relieved that it’s come and gone” and will “go out and enjoy themselves and worry about it in January”.