Whitbread sees its pub restaurant revenues rise

Shares in Whitbread dipped today despite the City warming to a positive trading update from the hotels to pub restaurant group.

In a trading update Alan Parker, Whitbread's chief executive, said that since the fourth quarter last year the group had seen growth trends "right across the business", as the focus on gaining market share was stepped up.

Total sales rose 14 per cent in the 24 weeks to August 19, 2010, and like-for-likes were up 7.9 per cent.

Across its pub restaurant business, Whitbread said total sales had risen 4.3 per cent, with like-for-likes up nearly four per cent.

Parker said its emphasis on value-for-money menus had increased footfall by nearly seven per cent.

He admitted that the eating-out market was very competitive and that the drive by rivals such as Mitchells & Butlers to increase their share of the sector only added to this.

But he added: "We've been achieving like-for-like growth in this area for two years. Yes it's competitive, but we're in the unique position with our joint pub restaurant/hotel sites to be able to generate further sales."

Yet despite turnover in many of its pub restaurants being helped by their sharing a site with a Premier Inn hotel business, which Whitbread also owns, Parker claimed the majority of customers were local people.

"It varies from location to location, but around 75 per cent of our pub restaurant customers are from the local area," he said.

The sites got what Parker termed a "top-up" from guests staying at a nearby Premier Inn.

The drive for growth had seen margins dip, he admitted, although he said the slide had been marginal: "It's pennies," he said.

Per head spend in Whitbread's pub restaurants had slipped one or two per cent, but this had been compensated for by the growth in the number of covers, Jackson added. "Sales were up despite the World Cup," he said.

Parker said that with tough comparatives the second half the group, whose other activities include the Costa Coffee empire, would not see the same level of trading performance as the first half.

"It would be unrealistic to expect the same growth pattern, but we're comfortable with profits estimates for the year," he added.

The City consensus is for around £265m of pre-tax profit.