Whitbread shrugs off consumer spending slowdown

Pub restaurant and budget hotel operator, Whitbread, said it is benefiting from the slowdown in consumer spending as customers are thriftier and therefore boosting its budget hotel chain, Premier Inn.

The company saw like-for-like sales in the 13 weeks to May 29 increase 7.1% and said Premier Inn, which makes up for approximately 70% of group earnings, continued to outperform the broader hotel market.

Premier Inn has more than 35,000 rooms in over 500 hotels in the UK.

Like-for-like sales at its Costa Coffee chain rose by 6%, with total sales up 28.4%.

Also in the same period, Whitbread said its pub restaurants division, which incorporates Brewers Fayre, Table Table and Beefeater, increased like-for-like sales by 3.6% but cost inflation had put pressure on gross margins.

Since the start of the year, the company’s shares have also outperformed the FTSE All Share Travel & Leisure Index by 13%.

At the company’s annual shareholders’ meeting, chief executive Alan Parker said despite the strong results, the group remains cautious should the consumer environment become more challenging.

Whitbread has recently had an overhaul of its menus and has changed beef to chicken, which is cheaper for the consumer as the cost of production is less.

The company recently announced it is planning to double the size of its Costa Coffee chain and expand Premier Inn by 50% over the next 5 years.

It said it will build at least 100 more Premier Inns next to its Beefeater and Brewers Fayre pub restaurants by 2013, and have 55,000 rooms globally.

The company also has 992 Costa coffee shops worldwide with 695 in the UK. The company aims to double that figure to 2,000, with half the new shops in the UK.

Story link: Whitbread shrugs off consumer spending slowdown