Diners will pay the price for the Living Wage, Mitchells & Butlers warns

The group – which owns All Bar One, Browns and Harvester – said it would aim to increase consumer spending through ‘tactical price opportunities’ across some of its bars and restaurants.

It also plans to offer diners the chance to ‘trade-up the menu’ to a more premium offering.

The move follows the announcement by Whitbread – which owns the Costa and Premier Inn chains – that it is planning to raise prices to combat the increase in wages.​

From next April all hospitality businesses will have to pay staff over the age of 25 £7.20 per hour, a 50p rise from the current minimum rate.

"The National Living Wage is highly significant for our industry due to the relatively high proportion of employees paid at or close to the minimum wage, with earnings supported by gratuities," Mitchells & Butlers said in a statement on the Stock Exchange.

“With consumers focused as ever on value and service, we do not believe it will be possible for companies in our sector to simply ‘control’ their way out of the National Living Wage.

"Our approach must therefore be rounded and must consider the long-term horizon: we recognise that it is a cost headwind but also that it potentially presents some consumers with higher incomes." 

The warning came as the restaurant group reported a 6.6 per cent rise in total revenue to £2.1bn for the year to 26 September.

Trading during the new financial year was down 1.6 per cent, which the company said was due to an increasingly competitive restaurant market.

Mitchells & Butlers runs around 1,600 managed pubs, bars and restaurants across the UK.