Whitbread froths up thanks to fury over Starbucks tax

Whitbread-owned Costa Coffee saw its sales soar 25.5 per cent in the 13 weeks to the end of November as its United States rival Starbucks flew into controversy over its failure to pay UK corporation tax.

Perhaps even more impressive was the 7.1 per cent rise in sales from branches and franchises which have been open at least 12 months. That is up from 5.7 per cent in the second quarter.

Chief executive Andy Harrison said: "We cannot disentangle Starbucks from all the things that we are doing ourselves, like a really good TV advertising campaign, improved food range and some really good Christmas offerings." But he admitted: "It certainly hasn't harmed us. What we believe is that people are voting with their taste buds."

When prompted, Mr Harrison couldn't avoid another dig at his US-based rival. He said: "Last year Costa paid corporation tax at 27 per cent which amounted to £17m. I am not making profit forecasts for the next two years but I am pretty certain we will continue paying tax at that rate. It's no wonder Costa is the taxman's favourite coffee chain."

Whitbread isn't just coffee and there was a 12.6 per cent growth in sales at Premier Inns. This reflects rapid expansion within the M25 and particularly London, where it now has 8,000 rooms. That has taken the capital's share of all Premier rooms in the UK up from 15 per cent to just over 20 per cent in one year. Some of that was Olympics driven but the demand remains strong with occupancy today running at or above 90 per cent.

Including the pubs and restaurants, third-quarter sales across the group were 14.4 per cent ahead of last year.

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