Mitchells & Butlers: All Bar One operator set for £100m Budget tax hit
All Bar One owner Mitchells & Butlers has become the latest hospitality business to warn of higher costs due to the tax changes outlined in Labour’s inaugural Budget at the end of October.
The group made the comments within its full year results release for the year to 28 September 2024, which was published this morning.
The group said that like-for-like sales increased by 5.3 per cent “out-performing against the market as a whole“. Operating profit rose from £98m in 2023 to £300m in 2024, thanks to higher sales and lower costs.
However, the group warned that changes to the National Living Wage and the level of employer national insurance contributions would cause a “sharp” rise in wage costs.
The firm estimated cost headwinds at around £100m this financial year, an increase of just over five per cent on its current cost base.
It said that “by far the most significant” cost addition was wage costs related to measures announced in the Autumn budget.
All Bar One owner warns on cost
Chief executive Phil Urban said that while the All Bar One and Toby Carvery owner faced “increased inflationary cost headwinds in the year ahead”, it 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,” Urban added.
The company added that it expected sales growth to be driven by price and spending per head, with volumes anticipated to decline in the low single digits.
The firm said that cost pressures during and after the pandemic had previously caused a “widespread and unavoidable increase in prices” and resulted in one per cent of pubs and restaurants closing the year to June 2024. Overall, 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.
“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,” the company said.