Whitbread makes loads of dough

Profits are up 11% at the Costa and Premier Inn owner for the year to 28 February. And Whitbread is kneading all the cash back into the business, creating 12,000 jobs.

by Rebecca Burn-Callander
Last Updated: 10 Sep 2013
After reporting an 11% rise in underlying profits to £356.5m for 2012, leisure and hotels group Whitbread has unveiled plans to grow Premier Inn by 45% to around 75,000 rooms and double coffee chain Costa's sales to around £2bn. The expansion will create 12,000 new jobs over the next five years.

Whitbread, which also owns the Beefeater and Brewers Fayre restaurants, currently employs 40,000 staff serving 22 million customers every month at more than 2,500 UK outlets. It’s the biggest industry player in the UK, selling 14 million Premier Inn rooms, 46 million restaurant meals and 320 million cups of Costa coffee in the last year alone.

The enduring demand for coffee-on-the-go - ‘The unseasonably cold weather has held back sales within restaurants, and benefited Costa,’ explains CEO Andy Harrison (the weather is used to explain away everything in this country) - and rooms-on-the cheap have driven up revenues by 14.2% to £2bn. Like-for-likes (sales stripping out the effects of new store openings) are also up by 3.7% across the group.

In the last year, Whitbread has increased its headcount by 3,000. (MT is taking bets on how quickly government will jump to comment on this job creation success – and try to infer that it’s because of one of its wheezes).  

Whitbread, which now employs 40,000 people, opened 324 new Costa stores over the year - 186 of which were in Britain. Whether you believe Harrison’s rhetoric on the positive effects of the cold weather or not, there has certainly been a sales boost in the latter end of Costa’s financial year. Commuters warming chilblains on oxblood-coloured cups has driven like-for-like sales up by 6.8%. But is this purely at the expense of restaurants? Or does this mean that Starbucks’ dominance of the high street is finally looking a little shakier? It could be that caffeine addicts are voting with their feet in the wake of that corporation tax furore.

The hotels business is also bringing home the bacon: Premier Inns increased revenues by 13.1% to £853.8m in the year, up 3.1% on a like-for-like basis. Whitbread opened 4,242 more rooms during 2012/13, taking the total to 51,671, and Whitbread has already pinpointed a number of new ‘trendy’ catchment areas for an additional 11,500. These will be available by 2018.

Chief executive Andy Harrison described today's results as ‘excellent’. ‘In April 2011 we established ambitious milestones to grow Premier Inn UK rooms by 50% to 65,000 rooms and to double Costa's worldwide system sales to £1.3bn,’ he said. ‘We are well on track to achieve these milestones and have announced new 2018 milestones to grow Premier Inn UK by 45% to around 75,000 rooms and to double Costa's system sales to around £2bn.’

It looks like Harrison’s found the secret recipe to keep Whitbread’s profits rising. Let’s just hope the strategy doesn’t run out of… yeast.

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