Underlying profit before tax was up 16.5% to £411.8m on revenue up 13% to £2.3bn. Growth was again strongest for Costa, where like-for-likes increased by 5.7% on total sales up 20.1% and profits up 21.9% to £109.8m.
In Whitbread Hotels and Restaurants, profits were up 11.2% to £348.1m. Premier Inn total sales were up 13.4% and like-for-like sales grew 5%.
The company said it had a strong finish to last year, with all its brands performing well, boosted by good Christmas and New Year campaigns and helpful weather comparatives. It said that the first two months of the new financial year have started positively, with good trading again helped by relatively soft comparatives, which will become tougher as it moves into the second half of this year.
Restaurant performance
Restaurants delivered a much better second half performance, which increased sales growth for the full year to 3.9% and like for like sales growth to 1.6%, outperforming the Coffer Peach industry benchmark outside the M25. Contribution margin was flat as a result of the stronger second half performance. This was aided by very favourable weather comparatives and less promotional discounting.
The company said: “We are rejuvenating our Brewers Fayre and Beefeater brands. This includes investing in our food development, revitalising our menu offer, improving our branding and signage and delivering a more consistent guest experience. We have updated 33 of our Brewers Fayre restaurants and we plan to complete the rest of the estate in 2014/15, at an average investment of around £50,000 per restaurant.
“In Beefeater we have converted eight restaurants to our new format, with a further 20 conversions planned in 2014/15 at an average investment of around £200,000 per restaurant. The goal in our Restaurants business is to “serve up great memories” for the 47 million guests who visit us each year and it is pleasing to see our guest scores improve by 3.2% pts to 66.1%.”
The group said that total worldwide system sales grew by 19.4% to £1.2bn during the period and are on track to deliver its 2018 milestone which is to reach around £2bn of system sales.
Costa growth
Total Costa UK retail sales grew by 16.5% and like for like sales in UK equity stores climbed 5.7%, mainly as a result of a 5% growth in transactions per store.
The company added 177 net new stores in the year, taking the total to 1,755. It expects its number of UK stores to increase to over 2,200 by 2018
The group said that some 2,000 baristas have completed its Maestro training course and its team engagement score is 82.4%. Some 139 equity stores were refurbished in 2013/14.
Costa Enterprises grew system sales by 22% and added 955 net new machines, giving a total of 3,515 units at the year end.
It said that Costa EMEI had a mixed performance with total system sales growing by 10.6% and like for like system sales by 1.4%.
The company said: “Our franchise business performed well with a strong performance in the Middle East and Ireland. In our equity business in Poland, the market was challenging and we are implementing a recovery plan. We have closed 15 unprofitable stores, continued the re-branding of our Coffeeheaven stores to Costa and concentrated on product development. In France we now have two franchise stores and four recently opened equity stores. Although it is early days we are pleased with the performance of our trial stores and have a pipeline for a further five stores which we expect to open during 2014/15.
Whitbread said that China remains an “exciting opportunity” where it operates two joint ventures. During the year it opened 73 net new stores taking its total number of stores to 326 in 30 cities.
It said: “We made good progress on the profitability of our like for like estate in China. This gives us the confidence to continue to invest in new store openings and to build the critical infrastructure, management capabilities and resources to construct a profitable.”
On track
Whitbread said it’s on track for its 2016 and 2018 growth milestones.
Underlying basic EPS in the year was up 20.1% to 179.02p and full-year dividend grew 19.9% to 68.8p. Year-end net debt was down by £79.5m to £391.6m.
Anthony Habgood, chairman, said: “This is another set of good results. Once again strong cash flow funded the necessary capital investment for our growth engines, Premier Inn and Costa, to increase their share of the market. We have recommended an increase in the full year dividend of 19.9% while maintaining a prudent balance sheet structure. I am confident that the brand strength of Premier Inn and Costa will continue to fuel the Company’s growth into the future.”
Andy Harrison, chief executive, said: “Whitbread has delivered another year of strong double digit growth, with total sales up 13.0%, underlying pre tax profits up 16.5% and EPS up 20.1%. This, combined with our good cash flow, has led the Board to recommend a full year dividend increase of 19.9%. This extends our track record of double digit growth, with sales growing by 11.4% over the last five years and EPS and dividends per share growing by 14.7% and 13.5% respectively. This success is built on our two strong brands Premier Inn, the UK’s favourite hotel chain and Costa, the UK’s favourite coffee shop and our 43,000 team members who work so hard to deliver a consistently good customer experience.
“We continue to invest in improving our customer propositions and international expansion. This includes the rollout of our “best ever bed” in Premier Inn, the launch of “hub by Premier Inn” and rejuvenating our restaurant brands. In Costa we are focussed on international growth in China and France and our rebranding in Poland, together with the continuing growth of Costa Express.
“We had a strong finish to last year, with all our brands performing well, boosted by good Christmas and New Year campaigns and helpful weather comparatives. The first two months of the new financial year have started positively, with good trading again helped by relatively soft comparatives which will become tougher as we move into the second half of this year.
“We remain on track to deliver our 2016 and 2018 growth milestones for both Premier Inn and Costa which, combined with our clear focus on returns, will create substantial shareholder value.”
This story was first published by BigHospitality's sister publication M&C Report. To subscribe contact Emily Croft on 01293 846578 or email emily.croft@wrbm.com