JP McManus-backed UK pubs group sees 'challenging' inflation likely to persist

Group warns cost-of-living crisis may affect consumers' ability to spend in its pubs

Mitchells & Butlers owns 1,600 pubs and restaurants, including All Bar One.

Mitchells & Butlers, the huge pubs and restaurants in Britain in which JP McManus and John Magnier own a significant shareholding, has said the outlook for prices, wage pressures, and costs inflation was "challenging". 

The group owns 1,600 pubs and restaurants, including All Bar One, Browns, Ember Inns, Harvester, Miller & Carter, Nicholson's, Sizzling Pubs, Toby Carvery and Vintage Inns, and employs 40,000 people. It was anticipating a large rebound from the two years of restrictions and closures during the Covid-19 crisis. 

However, the company has now warned about the cost-of-living crisis potentially affecting the ability of consumers in Britain to spend in its outlets. 

"The trading environment remains very challenging, with inflationary costs squeezing consumer discretionary spending and putting pressure on the industry's margins," said chief executive Phil Urban in an update to the stock market. 

"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," Mr Urban said. 

The company said it had left unchanged its financial targets for the time being but "it now seems likely that, particularly in the case of utilities, wages and food costs, these will persist at or above current levels well into the next financial year, increasing and prolonging the medium-term impact on margins". 

The shares, which trade on London's Ftse-250 index, have now lost about 37% of their value from this time last year.

Mr McManus and Mr Magnier, who together hold a stake of about 23%, early last year backed a plan to inject more money in the company to help get the group ready for the anticipated recovery after Covid.