UK pub groups warn on cost pressures as heat wave adds to woes

(Reuters) -British pub operators Mitchells & Butlers and Fuller, Smith & Turner warned on costs on Thursday as the sector scrambles to protect margins and attract customers.

Mitchells shares were down 1.2% in early trade, while Fuller, Smith & Turner stock lost about 2%.

Rival J D Wetherspoon earlier forecast losses this year, hurt by rising labour, maintenance and marketing costs.

With prices of everything from fuel to food ingredients rising, consumers are cutting back, while record high UK temperatures have also recently kept people at home.

Mitchells & Butlers reported slower sales growth towards the end of the third quarter, impacted by the hot weather and recent rail strikes.

Like-for-like sales rose 0.9% compared with the same period in pre-pandemic 2019, slowing from 2.2% growth seen in the first five weeks of the quarter.

"The trading environment remains very challenging with inflationary costs squeezing consumer discretionary spending and putting pressure on the industry's margins," said Phil Urban, CEO of Birmingham-based Mitchells, which has about 1,700 restaurants and pubs in the United Kingdom.

Mitchells, the owner of the All Bar One, Sizzling Pubs, Toby Carvery and Vintage Inns brands, said cost pressures on utilities, wages and food would persist at or above current levels well into the next financial year.

Fuller, Smith & Turner reported a 3% rise in total sales on pre-pandemic levels in the first 16 weeks of financial year.

“The industry-wide inflationary cost pressures around food supply, labour and particularly energy are showing little signs of abating," the company said in a trading statement.

(Reporting by Aby Jose Koilparambil in Bengaluru; editing by Vinay Dwivedi and Jason Neely)