SHARES in the pub giant that owns Glasgow’s famous Horseshoe Bar fell sharply this morning after it underlined the deep challenges facing the hospitality sector.

Mitchells & Butlers, which owns around 1,700 pubs and restaurants across the UK, warned this morning that cost inflation was “putting increasing pressure on margins”, adding that it was “also mindful of the pressures on the UK consumer over the coming months.”

The company said that its energy and utility costs will increase by around £150 million in 2022, up from £80m in 2019, and anticipates a further rise in those costs next years - despite the recently announced energy price cap for business, which will be in place for six months, reports the Herald. 

Phil Urban, chief executive of M&Bs, said: “The trading environment for the hospitality sector remains very challenging, with cost inflation putting increasing pressure on margins, and we are also mindful of the pressures on the UK consumer over the coming months.

“We remain focused on the delivery of our Ignite programme of initiatives, driving sales and delivering cost efficiencies. This will, combined with our diverse portfolio of well-known brands and strong estate locations, put us in a stronger competitive position to face the challenges ahead.”

M&Bs reported a 1.3 per cent fall in total sales for the 52 weeks ended September 24, driven mainly by Covid-related closures in the first part of the year and site disposals since 2019.

The company said like-for-like sales improved in the fourth quarter, "despite the ongoing impact of extreme heat as well as further rail strikes, both of which disrupted trade."

It added that sales had been “encouraging” over the August bank holiday, with like-for-like growth of more than 6% over the three-day weekend, “before returning to levels consistent with the quarter as a whole.” M&Bs said that growth continues to be driven by food sales.

Shares in M&Bs were trading at 125p, down 10p or more than 7%, at around 11am.