Coffee earnings help Whitbread through dire market

The group, which owns Premier Inn hotels and restaurants including Brewers Fayre, posted underlying pre-tax profits of 239.1 million for the year to March 4, up 6.6 per cent on a year earlier.

It revealed "outstanding" results at its fast-growing Costa division, with underlying earnings soaring to 36.2 million on like-for-like sales up 5.5 per cent.

This helped offset a far tougher year for Premier Inn, which saw comparable sales drop 4.3 per cent, while sales edged 1.7 per cent higher within the restaurants business.

But there were signs of a turnaround at the harder hit Premier Inn division at the end of the financial year and Whitbread said group like-for-like sales recovered to growth of 3.1 per cent in the fourth quarter, down 0.5 per cent over the full year.

Whitbread added its new year had got off to a good start.

Chief executive Alan Parker, who retires in November to be replaced by former easyJet boss Andy Harrison, said: "While the level of economic recovery remains unclear, the first seven weeks of the financial year have started well, with positive momentum across the business."

Whitbread's star performing Costa chain has now seen 32 consecutive quarters of like-for-like sales growth and is earmarked for further expansion.

The group plans to increase Costa store numbers in the UK and overseas by 250, or 16 per cent, over the new financial year under aims to have 3,000 by March 2015.

Around 130 of this year's target will be in the UK, it said.

Premier Inn is also in line for growth under a target to increase room numbers by over 2,500 this year and to 55,000 by March 2015.

An ad campaign featuring comedian Lenny Henry has led marketing efforts to promote Premier Inn hotels, which took a knock during the recession.

Whitbread claimed it outperformed the wider market and had seen its position as the UK's leading budget brand strengthened.

But Premier Inn faces the threat of increased competition from rival Travelodge, which this week launches a major advertising push, including its first television campaign for 20 years.