Premier Inn owner confident in long-term plan as F&B closures and softer demand hit profits 

Whitbread has said it is focused on its long-term growth plan after restaurant closures and cost pressures saw a decline in profits.

Last year the Premier Inn operator announced plans to convert 112 branded restaurants into bedrooms and exit 126 restaurants altogether.

Closures have been taking place since leading to a dip in F&B revenues, which has combined with softer UK market demand and cost increases.

Chief executive, Dominic Paul said: "Having laid the foundations for significant growth, we are executing at pace and making excellent progress on our strategic initiatives, against what has been a softer market backdrop over the past year. By focusing on what we can control, our five-year plan is on track to deliver a step-change in our profits, margins and returns and we remain positive about the medium-term outlook."

Whitbread today announced financial results for the 52 weeks to 27 February 2025, which showed group revenue was down 1%.

Meanwhile adjusted pre-tax profits stood at £483m, compared to £561m the previous year.

Statutory profit before tax was £368m, compared to £452m the previous year.  

Whitbread said the decline in profits reflects the impact of its growth plan, which has seen it close restaurants resulting in an 11% drop in F&B sales.

The hotel giant has also faced pressures from cost increases and high interest rates.

Long term, the closure of branded restaurants will allow the group to open 3,500 more rooms across its portfolio.

Paul added: "In the UK and Ireland, our Accelerating Growth Plan is progressing well and as we open our growing committed pipeline, we will reach at least 98,000 open rooms by FY30. At the same time, our commercial strategy is driving our outperformance versus the M&E market and we are continuing to realise material cost savings across all areas of our business without compromising our reputation for both quality and value.”

The impact of the pressures faced by the business were partly offset by cost savings and a strong performance in Germany. Whitbread said it had delivered £75m of savings in the year as it looks to cut costs by £250m by 2030.

UK accommodation sales were in line with the previous year, however revenue per available room (RevPAR) was down 2%.

The group has said its current forward booked position is ahead of last year, due to strong leisure demand.

In the next 12 months the group plans to open between 1,000 and 1,200 new rooms un the UK, of which between 500 and 700 will be in former F&B destinations.