Is the hospitality sector beginning to emerge from the cost crunch which has plagued it for the last 18 months?
Perhaps it would be overly optimistic to suggest the industry, which has practically been in crisis mode since Covid struck, is in full recovery mode. But encouraging signs are nonetheless beginning to emerge.
Mitchells & Butlers, one of the UK’s biggest pub companies and owner of landmark establishments such as Glasgow’s Horseshoe Bar, cheered investors today after announcing that profits for its current year would be at the top of market expectations.
READ MORE: Speyside: GlenAllachie releases long-awaited peated malt
Although it was “mindful” of the wider economic challenges and the pressure on consumers, as inflation and interest rates remain high, the company said trading was strong in its last financial year and continues to be in the current period.
Analysts said its performance suggests that consumers are continuing to value visits to bars and restaurants even though there remains intense pressure on household budgets.
And crucially from a business perspective, Mitchells & Butlers said the cost pressures which have been hammering the sector are “abating” and “remain at the bottom end of the range previously identified”.
READ MORE: Isle of Harris: Distiller launches long-awaited first whisky
Shareholders responded positively to the update, and duly sent shares in the leisure giant up more than 5% in morning trading.
It should be acknowledged that Mitchells & Butlers is not completely emblematic of the pub industry. As one of the biggest players in the sector, it has a level of scale that smaller independent operators are unable to count on. It also owns some of the finest pubs that the industry has to offer, many of which are in prime town and city centre locations, and some of the most established brands in the hospitality sector.
Regardless of M&Bs’ inherent advantages, it is surely encouraging from a hospitality perspective that one of its biggest players is on the up after such a difficult period.
And it is not the only company to have made positive noises this week. Dougal Sharp, founder and master brewer of Innis & Gunn, told The Herald that conditions remain “challenging” in the hospitality industry as it highlighted the progress made by its flagship lager in the on-trade.
However, on a more encouraging note, Mr Sharp expressed hope that the cost pressures that have made life so difficult for businesses over the last 18 months are finally beginning to ease.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here