Costa Coffee perks up Whitbread profits

There are now 1,755 Costa Coffee shops across Britain; 2,200 branches are expected by 2018. Whitbread has also pushed the brand east, opening 73 new sites in China through two joint ventures during the year. Whitbread now owns 326 Costa stores in 30 Chinese cities.

Meanwhile, Premier Inn grew sales by 13 per cent to £968m. As at Costa, new openings accounted for the bulk of the growth, with 23 new hotels (net of closures) taking the total to 672 - 172 more than the next largest UK hotel chain. Like-for-like sales were also up a respectable 5 per cent, thanks partly to a substantial upgrade to the chain's website.

Significantly, Whitbread's restaurant division - traditionally the weak spot - delivered a much improved second-half performance, leaving like-for-like sales up 2 per cent for the full 12 months. But the business still faces a year of refurbishment and reinvestment. Brewers Fayre and Beefeater pubs will see their food menus overhauled, while the company will overhaul its branding in order to deliver a more "consistent" dining experience. Management is planning an average investment of £50,000 per restaurant for Brewers Fayre and £200,000 for Beefeater.

Management does concede that trading in the final months of the financial year was flattered by "helpful weather comparatives" - a much warmer winter. This effect has continued into the current period, but is likely to fade as the year wears on. Broker Numis Securities expects pre-tax profits of £475m for 2014-15, giving EPS of 199p.