Andy Harrison, Chief executive of Whitbread, who own Costa amongst others, has today suggested a price increase is on its way. This is to offset the “substantial” hit of moving to a national living wage, coupled with reportedly slow sales for the coffee branch.
This comes after a variety of major firms also warned of the impact of the living wage, increasing next April from the current national minimum wage of £6.50, to at least £7.20 for those workers over 25.
Of the increase, Harrison said, ‘We shall mitigate this substantial cost increase over time with a combination of productivity improvements, boosted by investment in systems and training, efficiency savings and some selective price increases.’ and claimed that more details will be confirmed on October 20th, when they report their half-year financial figures.
In December, Harrison steps down as chief executive and will be replaced by Alison Brittain, currently of Lloyds Banking Group. With a six-figure salary plus countless incentives and bonuses (last financial year, Harrison took £4.6 million in pay and bonuses) it will be interesting to see how this pans out.
Is this just the start of a chain reaction of high street stores hiking their prices up to offset this new wage? How will this affect your business?
Let us know what you think in the comments below.