Premier Inn owner Whitbread to cut 1,500 jobs at struggling restaurants arm

Premier Inn owner Whitbread is to cut 1,500 jobs at its pubs and restaurants, which it will close or convert to hotel rooms, in the latest sign that the 282-year-old business is moving towards being purely a budget hotel chain.

The 282-year-old business announced its “accelerating growth plan” today after its latest financial results, which were driven by more strong performance from Premier Inn.

But its food and beverage arm, which includes Beefeater, Bar + Block and Brewers Fare, did not match the same performance, with sales down 2%.

As a result, Whitbread announced it would drastically scale back its food operations to become even more of a hotels business.

It will convert 112 restaurants to hotel rooms and sell another 126, with deals already agreed for 28. That will leave Whitbread with 196 “higher returning” food and beverage sites.

It said this: “will result in the reduction of around 1,500 roles” out of its 37,000-strong workforce.

It added: “While these plans are still subject to consultation, we will seek to find alternative opportunities wherever possible through the roles created by this plan and our existing recruitment process that makes c.15,000 hires each year”.

Whitbread said the new growth plan will give it 3,500 more rooms and could boost profits by much as £90 million in profit a year by 2029.

The business was founded in the 18th century as a brewery, but after founding Premier Inn in 1987 it became an increasingly large focus. It previously owned Costa Coffee but it sold the chain in 2018, in a key step towards its hotels-first journey.

Overall profit before tax was up by 21% to £452 million, with almost all of that coming from Premier Inn. The hotel brand’s UK revenue was up 10%, driven by 17% growth in London.

Dominic Paul, Whitbread Chief Executive, said: “We have delivered an outstanding set of results in FY24, led by the strength of our UK hotels business. Our increased levels of profitability, operating cashflow and return on capital reflect the power of our unique operating model. Our freehold-backed balance sheet, together with our strategy of continuing to invest, is allowing us to take advantage of the significant structural growth opportunity that exists following the decline in UK hotel supply.

“Against this backdrop, we are increasing our momentum to deliver long-term profitable growth. In addition to our strong commercial programme, we plan to optimise our F&B offer at a number of our sites to unlock up to 3,500 room extensions that will enhance the service for our hotel guests and deliver increased operational efficiencies. We recognise that our transition will impact some of our team members so we will be providing support throughout this process and we are committed to working hard to enable as many as possible of those affected to remain with us. The short-term impact on our profit performance this year will be more than offset by an uplift from FY27 with further increases thereafter in both margins and returns as we open more of the new extensions.”