Whitbread's new boss will have big shoes to fill

The Costa Coffee owner's latest results cap off an impressive five years for Andy Harrison.

by Jack Torrance
Last Updated: 03 Mar 2016

When Andy Harrison joined Whitbread as chief executive back in 2010, the leisure conglomerate wasn’t exactly down in the dumps. But in his five years in charge the company, which owns Premier Inn and Costa Coffee, has become an absolute giant.

Its latest results, out today, reveal that sales were up 11.3% year-on-year to £1.4bn in the six months to August 27, while underlying pre-tax profits rose 13.8% to £291.3m. It’s a fitting way to cap off Harrison’s five years at the company, whose share price has grown by 221% since he took the helm (despite slipping a little since he announced his intention to bow out).

The company’s growth has partly been off the back of Costa, which it acquired in 1995. Once a poor man’s answer to Starbucks, the brand has been named ‘Britain’s Favourite Coffee Shop’ for five years in a row and now has around 3,000 stores, including 1,000 overseas. That expansion shows no sign of waning - Costa's sales are up by 16.2%. 

Premier Inn hasn’t been doing so bad either. The budget hotel chain’s sales are up 12.6% over the period, and it says it is making ‘good progress’ on its plans to reach 85,000 available beds in the UK by 2020. That currently stands at around 60,000, and Premier Inn plans to roll out another 4,681 during the rest of this financial year.  

Credit: Yahoo Finance

‘Andy has focused the Company on the expansion of the successful Costa and Premier Inn brands, putting team members and customers right at the heart of Whitbread,’ said Whitbread’s chairman Richard Baker. ‘Andy joined a good company five years ago and, when he leaves us in a few weeks, he will leave it an even better company, with excellent foundations for future profitable growth.’

Harrison’s successor Alison Brittain (who will be the sixth female chief exec in the FTSE 100) will certainly have some big shoes to fill when she takes over in December. Though a company’s performance is about more than just the actions of its top dog, her time in the role will no doubt be compared against Harrison’s, as commentators debate whether hiring a banker with no chief executive experience was the right move.

It’s not like there aren't challenges on the horizon either. Costa has been expanding fast, but there surely has to be a point at which the coffee market reaches saturation. Premier Inn, meanwhile, faces competition from a newly emboldened Travelodge and innovative new alternatives like Airbnb. And Whitbread's wage bill is going to grow by as much as £20m per year as a result of the new National Living Wage.

If the going does get tough, Brittain will at least have unrivaled access to a strong coffee or a lie down.

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