Hangover dulls caffeine high

Elizabeth Fournier
WHITBREAD’s upbeat statement yesterday was a breath of fresh air to the markets, propping up the FTSE with a seven per cent jump as it promised yet more growth from its core Costa Coffee and Premier Inn brands.

But there’s one albatross still hanging around the company neck – its underperforming pub restaurant business, where like-for-like sales were down by 1.6 per cent.

Whitbread sold 239 of its Brewers Fayre chain to Mitchells & Butlers in 2006, and its remaining pub restaurants are almost all on the same site as one of the group’s budget hotels. But with M&B’s recent marketing push and Spirit’s refurbishment ramping up competition in the sector, success by association isn’t enough to make the food outlets worth keeping.

The group is quite rightly pinning its future on caffeine addicts, pouring recent funds raised into Costa and predicting revenues from the coffee chain will overtake the restaurant division by the end of the year.

Though the fall in restaurant sales is not enough to offset stellar sales at Costa and Premier, and we expect future profit upgrades from its solid growth plan, it does cast a shadow over one of the consumer sector’s few success stories at the moment.