Stock market-listed The Restaurant Group (TRG) said it was braced for food and drink costs to rise by 9 per cent to 10 per cent over its full-year, up sharply from around 5 per cent at the time of its full-year results in March.
The firm is working with supply chain partners to offset some of the steeper costs but bosses warned over a “volatile inflationary market”, with price pressures compounded by the conflict in Ukraine.
Ingredient prices have rocketed, with higher energy and fuel costs all pushing up the cost of food and drink.
But TRG said strong trading across its Wagamama and pubs businesses was helping in part to mitigate the inflationary pressures, with like-for-like sales up 11 per cent and 6 per cent respectively versus 2019 pre-pandemic levels in the six weeks so far of its second quarter.
This is lower than the 18 per cent and 12 per cent sales growth respectively seen in the first quarter, when the temporary reduction in VAT helped flatter sales figures.
The group said brands in its leisure arm matched wider market growth, with sales up 4 per cent in the six weeks to May 15.
Its concessions sites have been slower to recover but it said the bounce-back was accelerating, with the decline in sales narrowing to 11 per cent in the most recent six weeks from 26 per cent in the first quarter.
TRG now expects sales from the division to reach at least £100 million in 2021-22, with all 41 sites in the arm trading once again by July.
The company is set to open at least eight Wagamama restaurants and three delivery kitchens over its full-year, while three more pubs are in the pipeline.
It told investors: “Group trading continues to be strong year-to-date, driven by continued demand for TRG brands and their ability to out-perform the market.
“The group has flexibility both to invest in growing the business and reducing leverage over the medium-term.”