Whitbread shakes up its restaurants
Whitbread is to sell off about 10% of its restaurants in a bid to make the division more profitable and boost the company's flagging share price.
It has earmarked for sale 140 sites, including 30 Café Rouge brasseries, 10 Bella Pastas and seven others from its high-street restaurants division, including Sheila's and Terrazza.
The remaining disposals will be tail-end sites from its various other chains across the UK.
Bill Shannon, managing director of the restaurant division, said: "We want to be more clearly aligned to the growth markets in eating out."
The future of Whitbread's chains will depend on their performance. Shannon said they would need to produce "best in class" like-for-like sales growth in their respective market sectors.
Within the next three or four years, they will need to deliver an average 10% compound growth in annual profits, or face the chop.
The 30 Café Rouge sites that have been put on the market are mainly smaller outlets. The remaining 70 were showing an increase in like-for-like sales, said Shannon. A new-look Café Rouge and a new look Bella Pasta will be piloted in the new year.
The 259-strong Beefeater chain is to undergo a radical overhaul. About 80 Beefeaters are to be converted to a new format called Out and Out, which has been on trial at seven sites since March and produced sales increases of 10%.
Shannon described these as "destination restaurants with a highly contemporary design…not so dependent on steak and pure Britishness" as Beefeater. They will be introduced over the next 18 months to two years.
Another 90 "neighbourhood" Beefeaters will convert to a format called Banter, aimed at a slightly younger crowd (aged under 45-50). This is being trialled at two sites. Most of the remaining 90 Beefeaters will continue under their old name.
The 274-strong chain Brewers Fayre and 118-strong, family-orientated Brewsters chain will be expanded by about 20 new restaurants a year. These are among the company's best-performing restaurants. Most of the new sites will be alongside Travel Inn budget hotels.
But Whitbread will dispose of more "bottom end" sites from this chain than the four or five it currently sells each year.
The programme of acquiring sites for Costa coffee bars will be stepped up, to include more prime sites on the corners of main streets and between shops and offices. It also aims to sell more sandwiches. Whitbread has 222 Costas at the moment and wants 500 by 2004.
Contrary to some earlier speculation, Whitbread is keeping faith with its Pizza Hut restaurants. The 439-strong chain will be expanded by about 20 full-service restaurants and by some 30 home-delivery stores a year. The new home-delivery stores will be franchised out.
"Pizza Hut is growing faster than the pizza market overall and its returns are well ahead of the Whitbread criteria," said Shannon.
At TGI Friday's, where like-for-like sales have been falling for almost a year, expansion has been put on hold while Whitbread tests out a new, lighter look for the restaurants.
Shannon put the drop in sales down to increased competition in the American-style restaurant market and the failure of TGI Friday's to adapt quickly enough. But he added: "By 2004 we will have expanded the chain."
Whitbread's smaller chains, such as Mamma Amalfi and Abbaye, will have to vie with each other to see which of them survive. "We have to look into this part of our portfolio and pick those brands we can really get behind," said Shannon.
If they cannot produce 10% of the restaurant division's overall profits, they will be scrapped or sold.
The number of Dragon Inns - English pubs serving oriental food - will be doubled from five to 10 in the short-term and possibly to as many as 80 if the right opportunity arises.
Whitbread also has some brand new ideas up its sleeve, including a latin/Cuban restaurant due to open in Birmingham just before Christmas.
The company is also hanging on to its 65-strong Maredo steak-house chain in Germany, despite the limited opportunities for growth in the German market at the moment.
- The Dôme and Casa chains are already up for sale, as these were moved to Whitbread's pubs and bars division in March. The company announced nearly two weeks ago that it planned to sell off its 3,000 pubs.
Restaurant results:
Like-for-like sales during the six months to 2 September
Brewers Fayre +4.6%
Beefeater +0.9%
Costa +9.4%
Pizza Hut +4.8%
Germany +1.1%
Café Rouge/Bella Pasta -0.9%
TGI Friday's -6.0%
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