Whitbread, the parent company of Premier Inn, has unveiled a new five-year plan aimed at boosting margins and returns by fiscal year 2031. This strategy includes a significant overhaul of its restaurant business, which will see all 197 remaining branded restaurants converted to a more efficient food and beverage offering. This transition is expected to reduce total food and beverage sales by $140 million to $160 million and decrease profits by $40 million in FY27. The company anticipates cutting up to 3,800 jobs as a result of these changes.
The plan also involves the sale of $1.5 billion worth of Premier Inn properties following pressure from activist investors. Capital will be reallocated to fund the extension of its Accelerating Growth Plan (AGP), a reduced capital program in the UK and Germany, increased cost savings, and a material reduction in capital intensity. Whitbread paused share buybacks in FY27 but aims to return $2 billion in free cash flow to shareholders by FY31.
In FY26, Whitbread reported flat group statutory revenue at $2,920 million, with UK accommodation sales recovering in the second quarter and positive momentum in Germany offsetting lower food and beverage revenues. The company delivered better-than-expected cost efficiencies of $83 million, contributing to a 4% increase in adjusted EBITDAR to $1,074 million, despite higher cost inflation of 6.5% to 7.5% on its $1.7 billion UK cost base, including a $35 million impact from business rates. Premier Inn UK outperformed the market in RevPAR growth, and Premier Inn Germany saw sales grow by 13% with a segment adjusted profit before tax of $2 million, up from an $11 million loss in FY25.
Looking ahead, Whitbread expects to add approximately 1,000 new rooms, 80% of which will be freehold, and 750 AGP extension rooms, with most opening in the second half of the year. The company's forward bookings are ahead of last year, driven by peak leisure demand and a strong events calendar. However, UK market demand was soft at the beginning of the year, with UK accommodation sales declining by 2% and food and drink revenues falling by 16% in Q1 to May 29, 2025, due to weaker leisure and business travel and the AGP's impact. Analysts are generally positive, with most issuing "strong buy" or "buy" ratings and a long-term mean price target of 3,389 pence, about 5% above the current share price.
