Whitbread hit by spending slump

Whitbread, the leisure group behind the Pizza Hut, Beefeater, Costa and TGI Friday's brands, is feeling the heat from the consumer spending slowdown, reporting flat sales at its restaurants and health-club businesses.

Whitbread, the leisure group behind the Pizza Hut, Beefeater, Costa and TGI Friday's brands, is feeling the heat from the consumer spending slowdown, reporting flat sales at its restaurants and health-club businesses.

Across the group, like-for-like sales were up only 1 per cent over the three months to the start of June, with its budget hotels division the sole area of growth. It saw sales rise more than 8 per cent in the first quarter, excluding the performance of Premier Lodge, which Whitbread bought last year.

The biggest downturn within Whitbread was in its pub restaurants division, where its family-oriented Brewsters brand had been turning-off customers. The 142-strong chain is being converted into Beefeater venues, but this did not stop sales falling 1 per cent across its pubs division.

On the high street, Whitbread has reduced the price of burgers at its TGI Friday's outlets, and trimmed the number of dishes on the menu, to improve trading. Sales slid into negative territory for the three-month period, but customer volumes increased 8 per cent.

Shares in the company rose, however, on hopes the flagging businesses that are dragging down the group may be sold off, leaving Whitbread to concentrate on its budget hotels division. A number of private equity bidders are thought to be interested in Whitbread's parts. Its shares closed up 1.3 per cent at 927p.

Alan Parker, the chief executive, said the turnaround in its ailing pub and high street restaurants was about to take hold and shareholders would miss out if the company was broken up. "I do not believe it is in shareholders interests to pass that value opportunity on to someone else," he said.

Mr Parker said the outflow of members from its David Lloyd clubs had stopped. He said this was evidence of a stabilising in consumer spending.