THE owner of All Bar One and Harvester has seen annual profits drop by a quarter and warned over a hit from the Brexit-hit pound and soaring wage costs.

Mitchells & Butlers, which also owns chains including Toby Carvery and O’Neill’s, said profits tumbled to £94 million in the year to September 24 from £126 million the previous year despite a turnaround in trading in recent months.

But the group said the plunging pound would impact the £100 million of purchases it makes in foreign currencies each year, while the introduction of the national living wage has sent its employee costs surging.

Phil Urban, chief executive of Mitchells, cautioned over “external cost headwinds, notably from further wage inflation, the recent business rates review and exchange rate movements”.

“We are working hard to mitigate these headwinds wherever possible, both through building on our sales momentum and active management of our cost base,” he added.