Hotel and coffee shop owner Whitbread - known for its Costa Coffee and Premier Inn brands - has posted some strong sales growth this morning, but its restaurant business has disappointed the market.
Whitbread's share price was down four per cent at time of writing.
Over the 13 weeks to 1 December, Whitbread's like-for-like sales edged up 1.7 per cent. Costa Coffee's performance drove the growth, with sales increasing by 4.3 per cent.
However, investors will have been disappointed by the group's restaurants - such as Beefeater Grill - which posted a like-for-like sales drop of 1.5 per cent. Sales at Premier Inn were up 1.8 per cent.
Why it's interesting
Whitbread's results are not good news for the restaurant industry. Yesterday, Garfunkels owner The Restaurant Group also reported a sales drop of 5.6 per cent in the final quarter of 2016. And these poor sales figures came at a time when disposable incomes were rising; 2017 looks like it will be tougher, with rising inflation and a weaker jobs market expected to squeeze the UK consumer's spending power.
What Whitbread said
Chief executive Alison Brittain said: "We continue to make good progress against our three point strategic plan: to grow and innovate in our core UK businesses; to focus on our strengths to grow internationally; and to build the capability and platform to support future growth."
What analysts said
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "For Whitbread, however, Premier Inn and Costa are more important than their restaurant businesses, and these two brands continue to grow sales.
"Times look like they might be getting tougher for Whitbread, but the company has a strong balance sheet and two market-leading brands, which have helped it deliver sales growth in a variety of economic conditions."