Whitbread has reassured over its “resilience” in the consumer downturn after the leisure group posted a 7.1 per cent rise in first quarter comparable sales.
The Beefeater and Costa Coffee firm said it was reviewing menus and cutting costs to counter food price inflation at its pub restaurant arm, with cheaper meals also now on offer for cash-strapped consumers.
Its Premier Inn hotel chain saw double digit sales growth in the 13 weeks to May 29, up 10.7 per cent on a like-for-like basis, as it said the brand continued to “outperform” the market.
A 3.6 per cent increase in like-for-like sales at its pub restaurant arm suggested that trading had picked up since its year end, with analysts at Panmure Gordon expecting one per cent from the division and 5.5 per cent overall.
Alan Parker, chief executive of Whitbread, said the group remained wary of a worsening in trading conditions, but sounded a confident note over the company’s prospects.
He said: “The resilience of our businesses combined with cost actions we have taken, our investment pipeline and our strong balance sheet put us in a good position to continue the disciplined development of the group.”
The group has been rapidly expanding its two key brands - Costa and Premier Inn - in the UK and overseas.
Its Costa chain has grown year-on-year by 289 sites to 1,051 outlets, with the expansion lifting total sales by 28 per cent in the first quarter.
Comparable sales for the Costa division rose six per cent, in line with Panmure analyst expectations.
The group has high aims for expansion of its star performing Premier Inn business, which held talks over a potential £3 billion merger with rival Travelodge earlier this year.
The hotel division accounts for almost half of group revenues and is set to grow by another 50 per cent to 55,000 rooms in the next five years.
Whitbread announced in April that it had secured the first four of its planned 80 sites for new hotels in India and said it also has a pipeline of a further 11 sites in India for its Premier Inn brand.
The expansion is part of plans for 12,000 rooms in the next ten years in a joint venture with Indian real estate developer Emaar-MGF.
Whitbread has been bucking wider gloom in the leisure market - last year reporting pre-tax profits of £210.3 million from continuing operations for the year to February 28, up 26.3 per cent on a year earlier and better than expected by analysts.
Whitbread shares rose nearly five per cent in reaction, with analysts praising the sales growth.
Numis Securities said: “Whitbread has posted a very strong trading update with excellent progress across all three business areas.”
The group’s stock has already been boosted over the past week by speculation that it may seek to swap its pubs for the hotels business owned by Mitchells & Butlers.
Harvester and All Bar One owner M&B is said to have recently expressed an interest in Whitbread’s pubs, but Mr Parker today ruled out a sale.
He said the joint pub and hotel sites being eyed were “the core” of Whitbread.
Whitbread sold a tranche of pubs to M&B in 2006 for £500 million.