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Tue 20th Oct 2015 - Whitbread plans 220 new Costa stores this year
Whitbread plans 220 new Costa stores this year: Whitbread has reported it is planning to open 220 new Costa Coffee sites this year as the company achieved like-for-like sales growth of 3.6% in the six month to 27 August. Premier Inns like-for-likes grew 5%, Costa like-for-likes rose 4.4%. Total sales were up 11.3% to £1,439bn and profit before tax was up 5.4% to £254.9m after exceptional charges of £25.2m, primarily for onerous leases on historically disposed businesses and accelerated amortisation on IT systems. Of its pub restaurants business, the company stated: “Our restaurants business outperformed a soft pub restaurant market with total sales growth of 1.2% and like for like sales growth of 0.1%. Our continued focus on better procurement, labour efficiencies and a better menu mix enabled us to improve contribution margins despite modest top line growth. We have also made good progress in rejuvenating our brands with 56 Beefeaters converted to the new format and 13 Table Tables converted to Whitbread Inns. We are pleased that our guest scores continue to show an improving trend, increasing 1.9% points to 67.9%.” Chairman Richard Baker said: “Whitbread has produced another good set of results, demonstrating the strength of the Premier Inn and Costa brands. We are on track to deliver our growth milestones and will continue to invest in our people, our customer propositions and our systems to deliver profitable growth for our shareholders. I am pleased to confirm that Alison Brittain joined Whitbread as chief executive designate on 28 September 2015 and, as planned, will succeed Andy Harrison as chief executive on 7 December 2015. I would like to take this opportunity to thank Andy on behalf of the Board and our shareholders for his outstanding contribution to Whitbread’s success over the past five years. 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. 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.” Chief executive Andy Harrison said: “Whitbread has once again delivered double digit revenue and underlying profit growth. Group total sales grew by 11.3% to £1.4 billion with good like for like sales growth of 3.6%. This drove underlying earnings per share up 14.0% and the board has increased the interim dividend by 13.1%. Our two leading brands have delivered strong organic growth and continue to win market share. Premier Inn, the UK’s favourite hotel chain, grew its total sales by 12.6%, combining revpar growth of 4.6% with an 8.0% increase in rooms available and maintaining strong occupancy of 83.7%. Costa, the UK’s favourite coffee shop chain, delivered an excellent performance, with total sales growth of 16.2% and continued strong like for like sales growth of 4.4% in our UK equity stores. Restaurants made progress in a soft market with total sales growth of 1.2% and like for like sales up 0.1%. Trading momentum in the early weeks of the second half has been consistent with that seen across the first half. We remain on track to deliver full year results in line with expectations. This year we plan to invest around £700 million in driving our organic growth and further improving the quality and consistency of our customer experience. We expect to open around 5,500 net new UK rooms and around 220 net new Costa stores worldwide. We continue to focus on driving long term organic growth, financed from our own resources and delivering a good return on capital to create substantial value for our shareholders.” Of the proposed National Living Wage, the company stated: “The new National Living Wage, together with our pay for progression philosophy represents an incremental cost of around £15-20 million per annum over the next five years on today’s payroll. This increase is one of the inflationary factors which Whitbread manages every year. We can continue to mitigate this cost inflation over time through a combination of economies of scale as we grow, procurement benefits and investment in training and systems to deliver increases in productivity and efficiency, whilst offering our customers outstanding value for money.” The company added: “Trading momentum in the early weeks of the second half has been consistent with that seen across the first half.”


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