Hotel expansion

Whitbread closing restaurants and axing jobs

Premier Inn
Whitbread is focusing on its Premier Inn estate

Premier Inn owner Whitbread is cutting 1,500 jobs as it closes 200 branded restaurants and expands its hotels business.

The group’s restaurant brands include Brewers Fayre and Beefeater and it plans to sell 126 of its less profitable venues, with 21 sales already agreed.

It will also close 112 restaurants and convert the space into new hotel rooms.

Whitbread has a total UK workforce of 37,000 employees and would not say at this stage which restaurants are closing.

The former brewing giant said the changes would add more than 3,500 hotel rooms across its estate.

Chief executive Dominic Paul said: “Sometimes businesses do need to make difficult decisions like this.”

He added that the decision will support a material investment in the business and the country over the next few years.

Referring to the job cuts, he said the decision was “really challenging for us. It’s really important that we therefore handle that in the right way for our people.”

The moves are part of a three-year £150m cost-cutting programme. The cuts come after Whitbread’s pre-tax profit rose 21% to £452m for the year to 29 February.

It said the 112 branded restaurants it plans to turn into hotel rooms made a loss of £19m in the year, while the 126 restaurants it is selling made a loss of £9m. They were hit by fewer visits from non-hotel guests, Whitbread said.

The cuts will leave it with 196 branded restaurants, and 387 restaurants that are unbranded and part of the hotel.

Derren Nathan, head of equity research at Hargreaves Lansdown, said that Whitbread’s food and drinks business “is struggling so far this year, with sales 2% behind last year”.

Russ Mould, investment director at AJ Bell, said “hotels are where it’s at right now” and the decision to convert some restaurants into hotel rooms “looks logical” as the company focuses on its strengths.

“Brewers Fayre and Beefeater are arguably not strong enough brands to perform against a difficult consumer backdrop and in a competitive casual dining market. Whitbread should have scope to re-employ at least some of the staff affected by the restaurant cuts in its hotel operation.

“Premier Inn is well-positioned as it offers affordable and reliable accommodation for people looking for an inexpensive trip away or someone travelling for business.

“The company has endured a sluggish start to the start of the current financial year – although it remains positive on the outlook. Significantly, the company has achieved a meaningful narrowing in losses from its nascent German operation.”

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