Pub Giant Mitchells & Butlers Sees Record Profits Despite Looming Labour Challenges
Posted by Emily on 27th Nov 2024
Mitchells & Butlers, the pub and restaurant group behind well-known brands such as All Bar One, Harvester, O’Neills, and Miller & Carter Steakhouse, has reported robust financial results for the year ending 28 September 2024. The company is preparing for significant labour cost increases following recent budget announcements but maintains confidence in its ability to navigate the challenges ahead.
The group recorded a 5.3% like-for-like sales growth, with annual revenues rising to £2.6 billion from £2.5 billion the previous year. Operating profits surged by 41.2% to £312 million, while profits before tax reached £199 million, marking a stark recovery from a £13 million loss in 2023.
The upward trend extended into the early weeks of the new financial year, with like-for-like sales climbing 4% during the first seven weeks of reporting for 2025.
However, challenges lie ahead. The company anticipates a 5% rise in its cost base—equivalent to £100 million—driven by increases to the National Living Wage and employer National Insurance contributions. Despite these pressures, Mitchells & Butlers remains optimistic.
Chief Executive Phil Urban attributed the strong results to steady sales growth, easing inflationary pressures, and operational efficiencies. Urban emphasised the importance of the company’s Ignite initiative, a strategic programme aimed at driving efficiencies and enhancing customer experience. He also highlighted the success of Mitchells & Butlers’ capital investment programme in bolstering sales and market position.
Urban commented, “We are delighted by the 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 a very strong profit recovery. 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 company noted that while labour costs are expected to rise significantly, other expenses, including energy costs, have stabilised or decreased, particularly in gas and electricity, which are now in deflation.
Adding to its momentum, Mitchells & Butlers reported a 5.7% sales increase in the third quarter of 2024 and expanded its portfolio with the acquisition of Pesto Restaurants, a 10-strong Italian dining group, in May.
As the hospitality sector braces for rising labour costs, Mitchells & Butlers’ strategic focus on efficiency, customer experience, and investment positions the group well for sustained success.