Pub giants Mitchells & Butlers and Fuller’s warn over inflation

Leading pub firms Mitchells & Butlers and Fuller’s have warned that soaring inflation is continuing to harm trade and showing no sign of easing.

Mitchells & Butlers, which owns around 1,500 pubs across the UK, told investors that sky-high utilities, wages and food costs are expected to “persist at or above current levels well into the next financial year”.

Phil Urban, chief executive of the Harvester owner, said: “The trading environment remains very challenging with inflationary costs squeezing consumer discretionary spending and putting pressure on the industry’s margins.

“In the face of these challenges, we remain focused on driving sales and efficiency through our Ignite programme and pushing forward with our capital investment plan which we are pleased to see delivering strong sales uplifts.”

M&B said it saw strong like-for-like sales at the start of the quarter to July 16, rising 2.2%.

However, it said this fell back over the remaining weeks amid the Jubilee weekend, industrial action and the recent very hot weather, taking total sales growth for the period to 0.9%.

The rise was driven by food sales after a 1.3% fall in the company’s drink trade.

Fellow pub owner Fuller’s, which runs more than 380 sites, also said it has seen continued cost pressure in recent weeks.

Chief executive Simon Emeny said: “The industry-wide inflationary cost pressures around food supply, labour and particularly energy are showing little signs of abating.

“Our premium offer and effective supply chain management provide a degree of protection, but we are not immune from its effects on costs or consumer behaviour.”

It came as the Chiswick-based business revealed that like-for-like sales for the 16 weeks to July 16 are up 27% against last year following the easing of pandemic restrictions.

Fuller’s said it was particularly encouraged by its recovery in the City and West End, where dwindling numbers of commuters and tourists had previously impacted trade.