Whitbread has reported a 2.8% rise in like-for-like sales for the six months to 29 August, helped by like-for-like sales across its Costa Coffee business during the period increasing by 5.5%.
Total revenue for the group during the period increased 12.4% to £1.14bn, while underlying pre-tax profit climbed 12.6% to £216.1m, which the company said was due to a combination of organic network expansion and good like for like sales growth.
Across its Hotels and Restaurants division underlying profit rose 7.9% to £195.7m, while Costa reported underlying profit growth of 20.5% to £43.5m. It said that its restaurants business performed in line with a challenging market, with total sales up 2.9% to £269.9m.
Premier Inn total sales climbed 12.2%, with like for like sales up 3.3%.
Costa total sales increased 20.9%, while worldwide system sales increased 19.5%.
The group said that the performance of its restaurants was in line with a weather impacted sector with like-for-like sales flat year on year with covers down 2.4% and spend per head up 3.4%.
It said: “We continue to work on our menu propositions and have successfully increased our like for like breakfast sales by 10% year on year. As a consequence of these initiatives our ‘Guest Recommend Survey’, capturing feedback from some 234,000 customers, has shown an improving trend over the past three years.”
The company said that mitigating inflation remains a challenge, with like for like site contribution margins impacted by c0.8% in the first half.
It said: “Across the whole year our focus on cost efficiencies, menu management and targeted promotions will play an important part in offsetting a significant proportion of these food and wage cost increases.”
System sales were up 25.1% across Costa Enterprises, with Costa Express delivering a strong performance as the company achieved its 2016 target of 3,000 machines ahead of plan with the addition of 582 net new units during the first half, taking the total to 3,142. For the full year, it plans to have installed a total of 850 new machines. It said that a strong performance was also delivered in the Costa wholesale and Corporate Franchise businesses.
In Costa EMEI total system sales rose by 10.2% during the first half. Costa’s franchise operations grew total system sales by 16% with a particularly strong performance in the Middle East and Russia. In Poland, its business continued to suffer from a weak consumer environment and from the VAT rise on milk based drinks which was introduced on 1st April 2013.
The group said: “We remain excited about the international opportunity for Costa and have commenced a programme of opening trial stores in France. The first store opened on 16th October, with a further five stores planned to open between now and the year end.
The group said that Costa Asia had a good performance with system sales rising by 52.9% and the addition of 35 net new stores during this period. In China, it delivered like for like system sales growth of 5.5% during the first half and opened 30 net new stores taking its total stores in China to 283.
It said: “We are making good progress on the profitability of our like for like estate in China, which gives us encouragement to continue to invest in new store openings and to build critical infrastructure as we expand within the country. Outside of China we now have nine stores in South East Asia, with our latest international opening being our first store in Thailand.”
Whitbread said it continued to make good progress with its corporate responsibility programme, called Good Together.
The company said: “Our job creation, apprenticeship and training programmes have continued to grow with over 1200 new UK jobs in the half year, over 200 recognised qualifications achieved and over 800 people enrolled in our apprenticeship programme. We have played a leading role with Business in the Community in setting up the Big Conversation network which encourages companies in the hospitality sector to employ and train more young people.”
In light of the horsemeat scandal, it highlighted that it had adopted a new method of evaluating suppliers for compliance with its responsibility programme. “The clarity of criteria and regularity of monitoring will have a significant effect on our ongoing assessment of their suitability,” said Whitbread. “We have continued with our monitoring and assurance of our processed meat supply chain and will extend these processes to other key risk areas.”
Andy Harrison, chief executive, said: “This good first half performance puts us on track to deliver this year’s business plan and we remain on the right trajectory for our 2016 and 2018 growth milestones. Our combination of strong organic growth, good returns on capital and strong cash flow should continue to create substantial shareholder value.”
