James Moore: Costa brews up a sweet shot for Whitbread

Outlook

To my taste, Costa Coffee’s flagship offering is rather bitter when compared to Starbucks, or Caffè Nero. But the majority of its customers don’t seem to be complaining. Good news for investors, because selling coffee for the price of a pint makes for margins as sweet as chocolate.

The success of Costa – together with budget hotel chain Premier Inn – has delivered a quadruple espresso hit to the shares of owner Whitbread. There’ll probably be another when the results come through. They’ll be at the top of City forecasts. Its owner has achieved some neat revenue synergies through selling its high priced coffee at its cheap hotels.

So why didn’t other pub operators (Whitbread has them too) look into trying a similar experiment when they had the chance?

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