Costa Coffee owner sticks to expansion plans as profit grows

Whitbread Plc, an operator of hotels, restaurants and coffee shops, stood by its expansion plans in the UK and international markets, after posting a near 12 percent rise in full-year profit.

Shares in the FTSE-100 company, which owns Premier Inn hotels and Costa Coffee chains, rose as much as 4 percent in London on Tuesday morning.

Alison Brittain, who took over from previous CEO Andy Harrison in January, voiced her support for Whitbread’s previous 2020 milestones of about 85,000 Premier Inn UK rooms and about 2.5 billion pounds ($3.64 billion) systems sales for Costa.

To further capitalize on demand, Whitbread last year increased its expansion targets for both businesses, with greater exposure in London, a key focus for Premier Inn and overseas sales at Costa.

Brittain on Tuesday rejected speculations that the company could sell off Costa Coffee. The chain has grown to have over 3,000 outlets across the world, with around 2,000 in the UK.

“We are all very clear that Whitbread has been a great owner of Costa and given that track record and our future plans, there’s no compelling reason to change Costa’s ownership structure at this time,” Brittain said on a conference call.

Whitbread said total sales at Premier Inn rose 12.9 percent in the 53 weeks to March 3, with group sales rising 12 percent. Total Costa Coffee sales grew 15.9 percent with a 2.9 percent increase in UK like-for-like sales.

The CEO believes that the UK coffee drinking market hasn’t reached its peak and that there's still more momentum left. “From a structural perspective, there is more (coffee) consumption to do,” Brittain added.

UK is fast becoming a nation of coffee connoisseurs. Daily visits to coffee shops have increased and 16 percent of coffee shop visitors frequented a coffee shop at least once a day in 2015 compared with 14 percent a year earlier, according to consultancy Allegra Strategies.