WHITBREAD has reported a slowdown in its restaurant business, providing the latest evidence of the difficulties facing the UK eating-out market.
The UK leisure group highlighted the strong performance of its Premier Inn and Costa Coffee businesses but said it faced "challenging conditions" in its restaurant division, as it reported a six per cent increase in group like-for-like sales for the 39 weeks to the end of November.
Restaurant sales in its Beefeater and Brewers Fayre outlets fell 2.2 per cent in the third quarter, but Whitbread chief executive Alan Parker said average profitability across the eating-out chain would rise year on year on better operating margins.
The share price rose 10p to £14.34 despite the warning. Investors focused on positive news from Whitbread`s booming Premier Inn and Costa Coffee chains.
The budget hotel business saw sales grow 15 per cent while revenues were up 24 per cent at the coffee chain.
The trading update comes amid a difficult time for the UK restaurant sector after Clapham House, owner of the Gourmet Burger Kitchen and Tootsies chains, last week issued a profits warning off the back of fears of a slowdown in consumer spending.
Mr Parker said Premier Inn, which operates 35,000 rooms and contributes 75 per cent of Whitbread`s earnings, would look at opportunities to expand its Premier Inn business through acquisitions.
He said that after carrying out an extensive research project he believed Premier Inn could "significantly" exceed its target of 45,000 hotel rooms.