Pub groups challenged by soaring costs while sales rebounds

Pub owners Marston’s and Mitchells & Butlers have cheered recovering sales after pandemic restrictions eased but cautioned over surging costs.

Wolverhampton-based group Marston’s said it swung back to a £25.6 million profit for the half year to April as customers returned to pubs in force.

However, chief executive Andrew Andrea has said the company is “navigating our way through cost increases”, which it has sought to offset through efficiencies and higher prices.

Mr Andrea told the PA news agency that the price of wine its pubs increased 8% earlier this month while food prices increased by 8% alongside the reintroduction of the 20% rate of VAT, having previously been reduced to 12.5%.

Marston’s also confirmed that its brewing joint venture Carlsberg Marston’s Brewing Company is no longer expected to make a profit after being hit hard by rising commodity and electricity costs.

The group said that recent trading over the past six weeks has been “encouraging” despite inflationary pressures on customers.

Mr Andrea told PA that the company has not yet seen an impact to customer sentiment and expects the pub sector to remain resilient.

“It’s our job to get people back to pubs and at the moment that obviously means ensuring they get good value,” he said.

“People are returning and we’ve not seen the economic backdrop really change that.

“Historically, when there is pressure on households people still want to go out and socialise, but within their means, and pubs have always proven to do that well.”

Elsewhere, Harvester and All Bar One owner Mitchells & Butlers (M&B) also said it has been “encouraged” by a recent rebound in sales.

The group, which also runs Toby Carvery, said like-for-like sales grew by 1% against pre-pandemic levels during the six months to April 9.

However, chief executive Phil Urban stressed that the “trading environment remains difficult” as the firm highlighted headwinds of around 11.5% for the current year.

“Cost headwinds present a significant challenge to the industry, particularly those costs related to utilities, wages and food,” he said.

“In light of this, our teams have refocused their efforts on driving further efficiency and productivity gains.”

Shares in both companies were slightly lower in early trading on Wednesday.