THE owner of the All Bar One and Harvester bar chains has seen annual profits drop by a quarter – and warned over a hit from the Brexit-hit pound and soaring wage costs.
Mitchells & Butlers, which also owns chains including Toby Carvery and O’Neill’s, said profits tumbled to £94m in the year to September 24 from £126m the previous year.
But the group said the plunging pound would affect the £100m of purchases it makes in foreign currencies each year, while the introduction of the national living wage has sent its employee costs surging.
Phil Urban, chief executive of M&B, cautioned over ‘external cost headwinds, notably from further wage inflation, the recent business rates review and exchange rate movements’.
He said: ‘We are working hard to mitigate these headwinds wherever possible, both through building on our sales momentum and active management of our cost base.’
M&B said like-for-like sales fell 0.8 per cent over the year after a ‘challenging’ first half. It returned to sales growth in the final six months thanks to heatwaves in August and September, and sales are up 0.5 per cent in the first eight weeks of the new financial year, in spite of a tough comparison with a year earlier when the Rugby World Cup boosted trading.
The group, which employs more than 43,000 staff, has previously warned over the costs of the new minimum wage. But it said one helpful side-effect of the living wage is the recent slowdown in openings of restaurants.
‘Net restaurant openings are now broadly flat year-on-year, which gives us an opportunity to win back market share,’ said M&B.