Harvester owner warns of Brexit and rising costs will hurt UK hospitality | Mitchells and butlers

Pub and restaurant group Mitchells & Butlers have warned that problems caused by Brexit and rising costs will hurt the hospitality sector, just as businesses return to profits after pandemic restrictions eased .

The company, which owns pub chains including O’Neill’s and restaurant brands such as Harvester, said Brexit was still “a big event for the market” and created risks for the industry, especially in terms of concerns the supply and cost of products and labor shortages. . He said rising energy bills and rising staff salaries were also weighing on the industry.

Mitchells & Butlers – which also runs All Bar One, Toby Carvery and Miller & Carter – said customers started returning to its 1,600 UK locations when lockdown restrictions were relaxed in the spring. His sales rebounded in August and September and he is now receiving reservations for the Christmas holidays.

Announcing its annual results, the group said its suburban locations traded better than those in city centers, as the pursuit of working from home meant people went to their premises rather than a branch near their home. workplace. Attendance to major cities has slowly increased in recent months, a trend the company plans to continue.

Pub and restaurant goers want to socialize with others in a way they can’t at home following the pandemic restrictions, the group said, as it reported a pre-tax loss of 42 million pounds for the year through September 25, down from 123 million a year earlier. .

Mitchells & Butlers said it had returned to profitability in recent months and its like-for-like sales were 2.7% above pre-Covid levels in the past eight weeks.

Christmas bookings at its sites had started later than in previous years, but were now arriving, said Phil Urban, chief executive of the company, although this year’s meetings appear to be smaller than usual.

“We’re seeing bookings in cities and suburbs, across our portfolio,” he said.

“We have big venues especially in London that can accommodate big size parties and what we’re probably seeing less of so far is a company that comes in and tells us we can take your whole venue to. a night. But that doesn’t mean they won’t be replaced by people throwing smaller parties. We are encouraged on reservations ”.

Wine and spirits companies warned on Wednesday that there could be alcohol shortages in the UK during the holiday season, due to a lack of truck drivers. Mitchells & Butlers said they have several mid-size Mercedes-Benz Sprinter vans on standby, ready to pick up goods from depots in the event of a missed delivery by truck.

“We have a product in the supply chain, but either the supplier can’t get it to the depot or from the depot to the site. It is a localized problem. The problem is, we don’t know where he will be until he doesn’t show up, ”Urban said. He added that he was able in some cases to send vans to depots to collect supplies, “rather than wait for our logistics to reschedule.”

Mitchells & Butlers said it is working to offset the impact of rising costs, but warned they will have a residual impact on its performance in the current fiscal year.

Sign up for the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Rising utility bills remain a concern for the company as it will also have to pay its staff more from next April as they benefit from the ‘national living wage’ increase to £ 9.50 per hour for workers aged 23 and over.

Amid rising costs, the company has asked the government to extend the temporary reduction in the VAT rate on foodstuffs and sales of non-alcoholic beverages, which currently stands at 12.5% ​​but is due to return to pre-Covid level 20% next april.

The company said the temporary tax cut was worth £ 81million for the company in the year through September.

Joshua B. Speller