Whitbread sees further pub sales dip

Whitbread has reported a further decline in like-for-like sales on its pub restaurants business, but says moves to revamp the business are having an impact.

The Beefeater and Brewer's Fayre operation saw like-for-likes fall by 1 per cent in the 24 weeks to August, similar to the decline seen across the previous quarter. Total sales at the pub business grew by 3.2 per cent.

Whitbread reported that its new pub restaurants management team has continued to make progress, with the re-branding of all of its Brewsters outlets to Brewers Fayre now complete.

There have also been changes to menus and service style at the pubs, as part of a strategy to drive volume. The company reported that gross margins are 'marginally' up on last year, but said this has not been enough to compensate for increased energy, business rates and minimum wage costs.

Elsewhere in the group, the high street restaurants arm has seen Pizza Hut open 17 new outlets, TGI Fridays two and Costa 49 new stores since the start of the year.

However, the weak retail sector, compounded by the London bombings, has affected like for like sales at Pizza Hut and TGI Fridays in particular. High street restaurant like-for-likes were down 1.7 per cent, with total sales up 3.9 per cent on the back of the brand expansion programme.

Budget hotel chain Premier Travel Inns was once again the star performer. The operation, created by the merger of Premier Lodge, acquired from Spirit last year for £505m, with Whitbread's own Premier Travel Inn operation, saw like-for-likes up 8 per cent across the quarter with total sales up 53.7.

Total group sales were up 12.5 per cent across the quarter, with like-for-likes up 0.6 per cent. Chief executive Alan Parker said: "In a difficult trading environment we continue to grow sales, which is a testament to the underlying strength of our businesses, and the benefit of the Premier Lodge acquisition."

With the City still speculating on a possible break-up of the business, Whitbread has stepped up the return of cash to shareholders. Using the proceed of disposals and capital restructuring, a further £400m has ben released for share buybacks, £150m more than previously indicated.

The group has also announced today the appointment of Mike Tye, currently managing director of Premier Travel Inn, as the new managing director of its David Lloyd Leisure arm. Patrick Dempsey, formerly managing director of Marriott, will succeed Mr Tye.