Mitchells & Butlers PLC (LSE:MAB) said total sales fell 1.6% so far this year and cautioned the cost pressures facing the hospitality sector will mean "increasing and prolonging the medium term impact on margins".
The owner of the All Bar One chain said the 1.6% decline year-to-date was driven mainly by temporary Covid-related closures in the first part of the year and a slew of site disposals since the pandemic.
The third quarter started strongly, before falling back slightly across a period including the Jubilee weekend, industrial action and the recent very hot weather, to end up 0.9% across the full quarter, with food continuing to be the main driver, the group told investors.
"Inflationary cost pressures continue to present a major challenge to our business and to the hospitality sector as a whole," the statement said.
"Whilst the near-term outlook is unchanged 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."
Drink sales declined 4.9% on a like-for-like basis this year to date, compared to the equivalent part of 2019, according to the trading update.
Food sales remained relatively robust by comparison, increasing 5.5% over 2019 for the year so far.
"The trading environment remains very challenging with inflationary costs squeezing consumer discretionary spending and putting pressure on the industry's margins,” said Mitchells & Butlers’ chief executive Phil Urban.
“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."
Shares fell 1.45% this morning.