Whitbread’s doubts over economic recovery

Whitbread, which also owns the Premier Inn hotel chain and Beefeater and Brewers Fayre pubs, said trading conditions were flat across the country as household budgets remain under intense pressure, with the exception of London where business is booming.

Costa grew like-for-like sales three per cent in the 11 weeks to mid-August as temperatures soared, compared with eight per cent underlying growth during an exceptionally cold March to May quarter.

Whitbread’s underlying sales were up 2.1 per cent during the 11 weeks to mid-August, compared with 3.1 per cent growth in its first quarter.

But total sales surged 10.8 per cent as it opened new shops, coffee machines, hotels and restaurants.

Boss Andy Harrison said: “It’s clear that the London economy turned a corner some time ago. But it’s totally unclear to me what’s happening outside the M25 and on the evidence I have seen I would say it’s flat.”

Mr Harrison insisted topsy-turvy weather was to blame for the growth slowdown at Costa, with last summer the wettest on record and this spring the coldest in more than 50 years. Costa’s underlying sales in July were flat, a month when temperatures soared.

The coffee chain’s underlying sales growth of 5.7 per cent across the 24 weeks to mid-August was also slower than the 7.1 per cent growth seen during the same period a year earlier.

Mr Harrison insisted: “Short-term trading has been distorted by unusual weather. Do not draw any conclusions from 11 weeks of trading.”

Total sales at the chain soared 20.8 per cent since the start of March as Costa opened a net 78 new stores in the UK to give it 1,656 outlets.