Whitbread posts falling sales amid 'challenging' UK market

Food and drink sales have been impacted by a restructuring that Whitbread started in April last year, which includes cutting back its restaurant business to build more hotel rooms.

The £500 million plan, which executives dubbed “Accelerating Growth”, involves converting 112 branded restaurants into new hotel rooms and selling 126 more.

The plans announced in April 2024 will also see around 1,500 jobs axed as it looks to save about £150 million over the next three years.

Whitbread said on Thursday it was on track to save £60 million in this financial year.

On a like-for-like basis, it said first-quarter accommodation sales fell 3 per cent and food-and-drink sales dropped 2 per cent.

But it enjoyed a more robust performance in Germany, with total accommodation sales up 15 per cent and food up 22 per cent.

Dominic Paul, Whitbread chief executive, said: “We continue to execute our strategic priorities at pace and are making excellent progress with our Accelerating Growth plan and network expansion in both the UK and Germany.

“In the UK, we continue to outperform against a challenging market backdrop.

“Our forward booked position remains ahead of last year and whilst forward visibility remains limited, our commercial initiatives are underpinning our confidence in being able to continue to outperform the market.”

Richard Hunter, Head of Markets at interactive investor, commented: “There is little for investors to cheer in this update, even though it needs to be taken in the context of Whitbread’s ambitious five-year plan.

"The sale of its jewel in the crown, Costa Coffee to Coca-Cola in 2019 for £3.9 billion somewhat left Whitbread flying on one engine, largely reliant on its Premier Inn business.

"The situation was then compounded by the onset of the pandemic, and more recently the rise in interest rates and inflation, and therefore consumer confidence. Indeed, the shares remain down by a third since pre-pandemic although despite these major challenges there are some signs that the group is on the road to recovery.

"The irony of the ravages wrought by the pandemic is that it provided Whitbread with some major opportunities given a structural shift in the sector. Many independent hotels went to the wall as a result and there was next to no new hotel construction activity, which opened up the market to the larger operators.”