MITCHELLS & Butlers, the pub giant which owns Glasgow’s Horseshoe Bar, has signalled its optimism that “cost inflation headwinds across the supply chain are starting to abate”, as it reported “resilient” trading so far this year.

The hospitality company declared it had been encouraged by trading in the year to date as energy prices have “fallen by materially from earlier market highs”, adding that “early evidence suggests that cost increases in other areas, notably food, will soon start to slow”.

But it warned costs will continue to present a challenge in the near term.

City observers have been keeping a close eye on costs at hospitality companies since the surge in energy prices that began before Russia’s invasion of Ukraine sparked an inflation across the industry.

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Following a tumultuous year in 2022, recent updates from major operators such as JD Wetherspoon, Martson’s, and now M&Bs have suggested the pressure has begun to ease, albeit short-term challenges remain.

M&Bs said it had been “encouraged by the strength of trading throughout the first half of the year”, highlighting the continuing return to office working, strengthening city centres and a recovery of tourist numbers.

Like-for-like sales climbed by 8.5 per cent in the 28 weeks ended April 8, compared with the first half of 2022, amid volume growth in food and drink.

And the company added that trading had continued to be show “resilience” in the most recent six weeks, as the Easter weekend helped like-for-like sales grow by 8.9% and the picture improved on costs.

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Chief executive Phil Urban said: “We are pleased to report a strong first-half performance delivering continued like-for-like sales growth and outperformance against the market.

“The trading environment for the hospitality sector remains challenging with inflationary costs putting pressure both on the industry’s margins and disposable income of our guests. However, we are encouraged by the resilience of trade to date, including the most recent six weeks at 8.9% like-for-like sales growth, and also by early signs of the medium-term cost outlook improving.”

M&Bs, which operates high-street pub brands such as O’Neill’s, All Bar One, and Toby Carvery, reported total revenue of £1.28 billion for the first half, up from £1.16bn.

Pre-tax profits in the first half dipped to £40m from £57m, though in the prior period the company benefited from £53m of government support initiatives, including a £43m impact from the temporary reduction of value-added tax on food and non-alcoholic drink sales.

Shares in the company ended the day up around 2.05% at 199.1p.