Proactive Investors - Premier Inn owner Whitbread PLC (LON:WTB) said it would be cutting 1,500 jobs and shutting sites as part of an overhaul of its food and drinks business.
Sales and profits at the hospitality group jumped by double digits year-on-year in the 2024 financial; however, its pubs and eateries business, which includes chains like Brewers Fayre and Beefeater, has been struggling.
Revenues from the group’s UK food and beverage division dropped 2% year-on-year in the first weeks of the new financial year, largely caused by “softer trading in a number of our branded restaurants”.
Therefore, the company announced its “accelerated growth plan” – a turnaround strategy which will see 126 lower-returning restaurants closed while converting an extra 112 into new hotel rooms. Some 21 restaurant sites have already been earmarked for sale for £28 million.
Whitbread expects its actions will lead to pre-tax profits rising by as much as £90 million by 2029.
However, to reach this point, the company is expecting to invest £500 million over four years, with expenses predominately geared toward unlocking 3,500 new room extensions through the site closures.
In the upcoming year, profits are expected to be reduced by between £20 and £25 million because of the strategy, before being fully recovering in 2026.
Dominic Paul, chief executive at Whitbread, said: “Our freehold-backed balance sheet, together with our strategy of continuing to invest, is allowing us to take advantage of the significant structural growth opportunity that exists following the decline in UK hotel supply.”
Sales during the 2024 financial year jumped 13% to £2.96 billion, while underlying earnings rose 19% to £1.05 billion, helped by a 62% jump in revenues from its Premier Inn Germany division.