Birmingham pub group Mitchells & Butlers has warned it may have to hike prices as it faces soaring staff costs from the national living wage.

M&B, which owns well known chains All Bar One, Harvester and O'Neill's and employs more than 44,000 people, said it would look at ways to increase customer spend, including "tactical price opportunities" across some of its pubs and restaurants.

The listed group cautioned the new minimum wage would "dramatically" ramp up costs across the industry but said it would also see customers benefit from higher wages.

Its warning came as M&B revealed ongoing sales woes amid fierce competition in the restaurant sector and following a washout end to the summer which left comparable sales 0.7 per cent lower in the final weeks of its financial year.

The group said revenue had worsened since its year-end, down 1.6 per cent in the first eight weeks.

M&B saw pre-tax profits edge higher to £126 million in the 12 months to September 26 from £123 million the previous year but had warned over profits in September after the poor end to its financial year.

New boss Phil Urban, who replaced Alistair Darby two months ago after the profits alert, cautioned the market remained "highly competitive" but outlined plans to respond to challenges with "energy and urgency".

A statement posted to the stock exchange today said: "The introduction of 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.

"As a large employer, we need to respond to what will be an impactful cost headwind.

"With consumers as 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.

"We continue to consider productivity and efficiency opportunities, including technology and reviewing brand service models. We will also continue to look at opportunities to increase guest spend per head."