Whitbread may sell off restaurant chains

Whitbread, the Marriott hotels-to-David Lloyd Leisure group, may sell some of its underperforming high street restaurants as part of a strategic review expected to be concluded this autumn.

The company has said that if some of its restaurant chains, including Café Rouge and Bella Pasta, fail to meet stringent targets of like-for-like sales growth of about 5 per cent and double-digit earnings growth it will cull its portfolio.

However, Whitbread yesterday scotched reports that it had contacted a number of potential bidders and offered them its city-centre restaurant chains for around £300m. "That is pure rumour and speculation," said a company spokesman. "It is impossible to know what the outcome of our strategic review will be."

In the three months to 2 June, like-for-like sales at the group's high street restaurants grew by 2 per cent. This figure was buoyed by strong performances from two stars of the portfolio – Pizza Hut and Costa Coffee. It compared with sales growth of 4.7 per cent at Whitbread's Beefeater outlets and 3 per cent at its Brewers Fayre units.

Last October, Whitbread announced a provisional review of its restaurants. To get the ball rolling, it decided to sell about 10 per cent of its portfolio, or 140 sites. Whitbread, which sold its pub estate and brewing business last year to focus on the faster-growing hotels and leisure sectors, also announced plans to double its Costa outlets to 500 and expand Pizza Hut to over 500 sites from about 440.

The spokesman also denied reports that Whitbread was planning to change its name. "Whitbread is the name that has served us well for 260 years and there is no obviously better name," he said. Bass, a rival hotels and bars operator, recently renamed itself Six Continents to underline the split from its brewing business that it sold to Interbrew last year along with Whitbread.

Last year, Whitbread's restaurants division made operating profits of £123m on sales of £1.1bn. This was largely generated by Beefeater and Brewers Fayre, the group's successful pub restaurant brands. Whitbread is due to report interim results in October.