Pubs operator Mitchells & Butlers yesterday warned it faced rising costs next year and will need to accelerate sales growth to maintain profits.

Pubs operator Mitchells & Butlers yesterday warned it faced rising costs next year and will need to accelerate sales growth to maintain profits.

Mitchells, which has about 2000 pubs in the UK, said increased sales are necessary to offset substantial cost increases, particularly in duty on alcohol, employment, food and energy.

The company said duty costs will rise by £9m, with employment costs up by £11m. It did not put an estimate on commodity and energy input costs, which it said are "highly volatile and unpredictable".

The owner of the Harvester and All Bar One chains reported a 1.3% rise in like-for-like sales in the nine weeks to September 20 but said they will need to grow about 3% in 2009 to achieve a level of operating profit similar to that of this year.

Mitchells said same-outlet food sales rose 3.6% in the last nine weeks, while drinks sales rose by 0.3% in the same period.

Its value formats of Pub & Carvery, Sizzling Pub Co, and the Cornerstone Community pub, which offer main meals for as little as £3.92, saw strong growth, while its mid-market Harvester brand had seen a slowdown, the company said.

Finance director Jeremy Townsend said the consensus forecast for operating profit in the year to September 27 was £330m to £335m and the consensus for underlying pre-tax profit was between £168m and £169m - in line with the average forecast.

Mitchells, which will report full-year results on November 26, said productivity gains and cost management had helped offset cost increases during the year.

However, it expects market conditions to remain challenging as consumers rein-in spending on non-essential items.