Costa owner Whitbread buys Coffee Nation for £60m

02 March 2011 by
Costa owner Whitbread buys Coffee Nation for £60m

Costa's parent company Whitbread has bought coffee business Coffee Nation for almost £60m and has revealed plans to launch a new brand, Costa Express, targeting the self-serve coffee bar sector.

The news comes as Whitbread unveiled a 6.7% rise in like-for-like sales for the 50 weeks to 17 February 2011. Premier Inn contributed strongly to the growth with an 8.8% uplift in like-for-like sales over the period, while its restaurant brands, which include Beefeater, Table Table and Brewers Fayre, saw like-for-likes climb 3.3%.

Meanwhile Costa, which is the UK's largest coffee shop brand with 1,850 stores, 1,200 of which are in the UK, saw like-for-like sales up by 7.9%.

Whitbread said the deal with Coffee Nation would provide Costa with access to new types of location in an "emerging" sector. There are currently around 2,000 self-service coffee bars in the UK, of which Coffee Nation operates 900. Whitbread said it wanted to see 3,000 Costa Express bars across the UK over the next five years, capable of quadrupling its profit contribution. Self-service coffee bars differ from vending machines in that they use fresh milk and freshly-ground coffee.

Commenting on the acquisition, Whitbread chief executive Andy Harrison said: "Customers increasingly want great tasting coffee on the go, which makes the self-serve coffee market very attractive. This acquisition provides an exciting launch pad to develop 3,000 Costa Express bars across the UK, providing an additional growth lever for the Costa brand and making Costa available to more customers in more locations."

Other trading highlights for Whitbread included:


â- Premier Inn like-for-like occupancy for the year to week 50 was 76.3% (Full year 2009/10: 70.2%)
â- Premier Inn like-for-like revpar growth of 8.5%
â- Restaurants have delivered year to date total covers growth of 5.6% and have "recovered well" from the difficult trading before Christmas
â- During the year Whitbread has opened 22 hotels, 2,138 rooms and 8 restaurants

â- Total system sales up 31.1% to £630m and total franchise system sales up 34.3% to £268m
â- Like for like sales in the last 11 weeks are up 3% against a strong final quarter last year
â- Year to date like-for-likes have grown 8.6%. By the end of 2010/11 will have 1,200 UK stores and 650 internationally

Whitbread to spend £7m on sustainability >>

Whitbread eyes expansion as it leaves recession behind >>

By Neil Gerrard

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