(Reuters) -Two of Britain’s biggest pub operators warned on Wednesday that the cost of living crisis and expenses stemming from the Ukraine war would crimp their businesses, suggesting a tough outlook for an industry still recovering from the pandemic.
The bleak view from Mitchells & Butlers (LON:) and Marston’s highlights the challenges facing the hospitality sector as prices of raw materials rise and consumers limit spending due to slow wage growth and soaring inflation.
“The trading environment remains difficult. Cost headwinds present a significant challenge to the industry,” Mitchells & Butlers Chief Executive Phil Urban said in a statement.
The rising cost pressures come at a time when the industry is just beginning to recover from the pandemic and widespread labour shortages caused by Brexit.
Both Mitchells & Butlers and Marston’s posted an interim pre-tax profit compared with a year-ago loss as customers returned to pubs after COVID-19 curbs were eased.
Now, they are plotting measures to limit the impact of inflation, with Mitchells & Butlers saying it has already bought about 80% of its energy requirements for the year. The owner of All Bar One, Sizzling Pubs, Toby Carvery and Vintage Inns brands has also hedged roughly 10% its energy requirements for 2023.
Smaller rival Marston’s, meanwhile, said it was cutting costs and switching up its pricing strategies.
“Whilst mindful of the challenges which every hospitality business currently faces, trading remains stable and we look forward to an uninterrupted summer,” Marston’s CEO Andrew Andrea said.
Rival Wetherspoon had also warned of “considerable” cost pressures earlier this month.