Whitbread prepared for stiffer competition in 2013

WHITBREAD, Britain’s biggest hotel and coffee shop operator, said it was preparing for more competitive markets in 2013 as two of its big rivals, Travelodge and Starbucks, shake off recent setbacks.

The company said it would meet annual profit forecasts, even though heavy snow in January had slowed like-for-like sales growth in its fourth quarter to 2.7 per cent, hitting its restaurant business particularly hard. That was down from a rise of 3.3 per cent across the group in the third quarter.

Whitbread has performed strongly through the economic downturn as customers trade down to its more affordable Premier Inn hotel rooms and flock to its ever-expanding Costa Coffee houses. Total sales rose 14.8 per cent in the 50 weeks to February 14.

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Chief executive Andy Harrison said Whitbread would counter competition by concentrating on offering good service to its 21 million monthly customers.

Liberum Capital analyst Patrick Coffey said he still expected Whitbread to progress: “Our recent proprietary consumer survey suggests Premier Inn will continue to win share versus Travelodge. We also continue to see greater upgrades over the next year as Costa delivers growth well ahead of market expectations.”

Whitbread, which also runs the Beefeater and Brewers Fayre pub restaurant chains, joined a growing number of firms caught up in a horsemeat scandal that is spreading across Europe when it found equine DNA in meat lasagne and beef burgers this month.

Yesterday, it said it had found no more contamination, had a new supplier of beef burgers and was planning a new traceability system to track ingredients “from field to fork”.

It added: “We believe that a wholesale change is required to the way the supply chain is regulated and a tougher regime needs to be put in place.

“As a major player within the industry we intend to take an active role and assist the Food Standards Agency in setting the standards in the food supply chain that the UK public expect and deserve.”

At Costa Coffee, which recently grabbed headlines when 1,700 jobseekers applied for just eight posts at one of its new British stores, like-for-like sales rose 5.5 per cent compared with growth of 7.1 per cent in the previous quarter.

Costa has 1,500 UK stores and expects to increase that to 2,000 as part of a push to double its size worldwide to 3,500 stores by 2015/16. As well as expansion in China, the firm is testing stores in European transport hubs, including Lisbon airport and the Gare de Lyon train station in Paris.

Like-for-like sales at Premier Inn, which has doubled in size in the last decade to more than 50,000 rooms and is aiming for at least 65,000 by 2015/16, rose to 2.9 per cent in the quarter.