Alison Brittain has just taken the reins at Whitbread, and she's clearly keen to make her mark. The former head of retail banking at Lloyds has just announced a plan to trial digital ordering for Costa customers as part of plans to keep the group's brands, which also include Premier Inn and Taybarns, 'relevant and fresh'. Looking at Whitbread's latest financials, it's easy to see why.
Its third quarter results aren’t bad – far from it – with a 10.4% increase in sales driven by strong growth in Premier Inn, but overall revenue growth was slower than predicted. Like-for-like sales grew by 3.5%, compared with market expectations of 4%, and Costa Coffee's like-for-likes were down from 4.5% in the first half to 2.5% in the third quarter.
Strong brands like Costa Coffee and Premier Inn are an asset but can also be a disadvantage if you become too reliant on them or complacent about their appeal to customers. Brittain has evidently honed in on this pretty quickly. While noting ‘we have fundamentally a structural growth business and a strong one’ with ‘the nation’s favourite coffee and hotel brands’, she also acknowledged there was a challenge to keep them ahead of the competition.
The digital ordering trial is one attempt to do that. The system will allow customers to order a latte on their smartphone in advance and pick it up from the shop a few minutes later - in theory minimising time spent in the queue.
‘We have to make sure they [the brands] remain relevant and fresh,' Brittain said. 'We need to be leading and responding to changing tastes. We have grown so rapidly and successfully that we need to upgrade our systems and infrastructure and core capability.'
Whitbread said sales at the coffee chain were 'softer' in November, reflecting the slowdown in shopper numbers in retail parks and high streets, but that the group is still on track to hit full-year targets. Long-term goals include 85,000 Premier Inn hotel rooms by 2020 and £2.5bn of revenues for Costa.
With that in mind, it’s interesting to see Brittain cracking on with the new initiatives – another recent announcement unveiled a new ‘food-led concept store’ called Costa Fresco, in an attempt to snap up some of the lunch market. Along with the digital ordering trial, this could well be the first in a string of tricks she has up her sleeve. Whether they’ll prove the catalyst for stronger growth at Whitbread remains to be seen.