The hospitality giant behind high street cuppa Costa revealed ambitious expansion plans as it seeks to double the coffee brand’s annual sales income inside five years.
Hotel and restaurant firm Whitbread said it expected to create as many as 12,000 UK jobs by 2018, as the group posted an 11.4% increase in underlying pre-tax profits for the year to the end of February.
Once again Costa was the best-performing of Whitbread’s brands, posting a 24% rise in all sales to just over £1 billion and with annual underlying profits of £90.1 million representing a 29% increase on last time out.
Meanwhile, total sales at budget hotel chain Premier Inn also rose, by 13.1%, as part of a 5.9% profits rise in the group’s hotels and restaurants division.
Much of that growth is down to Whitbread’s already rapid and continuing expansion, though like-for-like revenue also increased during the 12-month period by 6.8% at Costa and by 3.1% at Premier Inn.
Shareholders will benefit from a 12% increase in dividend to 57.4p per share.
Chief executive Andy Harrison said the posting marked “another set of excellent Whitbread results”.
“Over the last five years, throughout the worst of the economic downturn, Whitbread has grown its sales by 11% per annum and profits by 12% per annum, together with 12% per annum growth in dividends,” he said.
“Return on capital has also increased from 11.4% to 14.0% over that period. In April 2011 we established ambitious milestones to grow Premier Inn UK rooms by 50% to 65,000 rooms and to double Costa’s worldwide system sales to £1.3bn.
“We are well on track to achieve these milestones and have announced new 2018 milestones to grow Premier Inn UK by 45% to around 75,000 rooms and to double Costa’s system sales to around £2bn.
“This exciting organic growth opportunity, together with a clear focus on returns, will continue to create substantial shareholder value.”
But Mr Harrison sounded a note of caution over the “unseasonably cold weather” seen during the first few weeks of the current financial year, which had a negative impact on Whitbread’s Beefeater Grill, Brewer’s Fayre and Table Table restaurant brands “In the first few weeks of our new financial year, group trading has been in line with our plan,” he said.
“Premier Inn has maintained its positive momentum. The unseasonably cold weather has held back sales within restaurants, and benefited Costa.”
Analysts were positive about the year’s trading and encouraging medium-term targets if a little cautious about the weather-afflicted shorter-term performance against tough year-on-year comparatives.
Tim Ramskill at Credit Suisse said Costa had every opportunity of making its targets by continuing to expand its estate, fitting more of its Express branded coffee machines and growing the system’s European footprint, while growth at Premier Inn would also be driven by an achievable increase in floorspace.