Whitbread Divests 51 Branded Restaurants for £56 Million: A Strategic Shift in Focus

A Transformative Sale: Whitbread’s Strategic Realignment

In a significant restructuring effort, Whitbread has successfully sold 51 of its branded restaurants and bars for a total of £56 million. This decision is part of a broader strategy to shift focus away from underperforming restaurant operations and toward enhancing its core hotel business. Earlier this year, the company announced plans to convert 112 of its restaurant spaces into approximately 3,500 hotel rooms, alongside exiting 126 branded restaurant locations altogether.

Simon Ewins, managing director of Whitbread, emphasized at the Annual Hospitality Conference that some restaurant operations had become a “distraction” from the company’s primary objectives. By selling these establishments, Whitbread aims to streamline its focus on its hotel offerings, particularly the successful Premier Inn brand.

New Directions in Hospitality

Whitbread’s decision to pivot comes at a time when the hospitality sector is evolving. The company has confirmed that planning applications for over a third of its restaurant spaces, deemed suitable for conversion, have already been submitted, with the first approvals already granted. Construction is underway, and the newly converted rooms are expected to be fully operational by the end of 2026.

As part of its rebranding efforts, Whitbread plans to replace these sold restaurants with an integrated ground-floor food and beverage proposition, which aligns with modern hospitality trends that prioritize guest experience and convenience. However, it should be noted that total food and beverage sales saw a decline of 7% during this transitional period.

Performance Metrics and Future Goals

Despite the challenges, Whitbread remains optimistic about its hotel performance. In its recent half-year results, the company reported an adjusted profit before tax of £340 million, slightly lower than the previous year’s £391 million. Hotel occupancy rates are encouraging, with London maintaining an impressive occupancy of 81.5% and regions exceeding that at 83.5%.

During this period, Premier Inn opened 780 new hotel rooms, including a pioneering joint development of Premier Inn and ‘Hub by Premier Inn’ in Paddington, London. However, the company also closed 304 rooms to optimize its overall estate. As of late August 2024, Whitbread operates 855 hotels and nearly 86,000 rooms, with ambitious plans to expand to 98,000 rooms by FY30, ultimately aiming for a total of 125,000 across the UK and Ireland.

Leadership Insights on Growth

Dominic Paul, chief executive of Whitbread, expressed confidence in the company’s growth trajectory. He stated, “In the UK, we have a clear pathway to further extend our market-leading position and capitalize on the favorable UK supply backdrop.” Although the market has softened slightly compared to last year, Paul remains optimistic about achieving substantial growth in UK returns over the medium term while continuing to enhance customer experiences.

Whitbread’s strategic realignment and focus on operational excellence underscore its commitment to maintaining a leading position in the competitive hospitality sector. With Premier Inn commanding a 12% share of the total hotel room supply in the UK, the company is well-positioned to leverage its strengths and meet the evolving needs of today’s travelers. As the hospitality landscape continues to change, Whitbread’s adaptability and vision will likely play a crucial role in its future success.