By Yamini Kalia and Anchal Rana
(Reuters) - Premier Inn owner Whitbread (LON:WTB) announced plans on Tuesday to close 238 underperforming branded restaurants, resulting in 1,500 job cuts in the UK.
At the same time the company, which owns about 800 hotels across the UK, lifted its dividend by 26% and said it planned to buy back shares worth 150 million pounds ($187.91 million). Some of the restaurants being closed would be converted to hotel rooms, it said.
"Sometimes businesses do need to make difficult decisions like this," CEO Dominic Paul told journalists about the job cuts, which will reduce the group's UK workforce by 4%.
"That said I think we're doing it for absolutely the right reasons, it's going to support a material investment in this business and this country over the next few years."
Whitbread said out of the underperforming restaurants, it plans to convert 112 into new hotel rooms and sell the remaining 126.
It will keep 196 branded restaurants open following the changes, but did not say which brands.
The hotel group, which also owns restaurant and pub chains such as Beefeater and Bar+Block Steakhouse, announced the plans as it reported a 36% rise in annual pre-tax profit to 561 million pounds, slightly below market expectations.
Its shares, which have fallen about 16% this year, were up marginally at 0827 GMT.
Whitbread's plan to convert restaurants to hotel rooms comes at a time when the hotel industry is grappling with reduced supply as developers struggle to build new hotels due to high interest rates and competitors find it difficult to secure new sites.
Paul said the reorganisation plan would help grow the company's pipeline and gain market share amid tough market conditions.
Whitbread plans to open 3,500 new hotel room extensions, setting it on track to have 97,000 hotel rooms in the UK by the end of fiscal 2029.
Forward bookings are ahead of last year, the London-listed firm said, adding that its expansion plans for Germany remained on track.
Major airports in the UK such as Heathrow and airlines including Easyjet (LON:EZJ) have projected a strong summer season.
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