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Whitbread & Company: advertising & marketing profile

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Whitbread has altered the whole direction of its business since 1998. That year the company was the UK's biggest pub landlord and a mong its best-known brewers. Over the next few years however, as a result of a series of acquisitions and disposals, the group overhauled its entire portfolio and reinvented itself as the UK's #1 budget hotel and leisure operator under what is now the Premier Inn brand. Virtually all of the other businesses it controlled in 1998 have now been sold.

Brands & Activities

Following the sale of its drinks and pubs divisions, Whitbread now focuses on two of the highest-growth areas of the UK leisure market: hotels and eating out. It describes itself as the UK's leading hospitality company.

Premier Inn is the UK's biggest hotel brand as well as clear leader in the budget value segment, catering to business travellers and leisure customers. The brand has undergone a complete overhaul in recent years, with facilities upgraded and improved, including en-suite bathrooms for all rooms, TV and internet access. All hotels now offer a restaurant and promise guests a "Good Night Guarantee" of customer satisfaction, with a good quality room, comfortable surroundings and friendly service, or a full refund. The company scored an 81% satisfaction score from guests in 2009. As of March that year, it had around 40,600 rooms in 600 hotels, equivalent to 38% share of the segment. (Main rival Travelodge has an estimated 22% share). Premier Inn has a target of 45,000 rooms by 2011, and has steadily added to its portfolio through acquisition. The business was created from the purchase of Premier Lodge in 2004 and its merger with the group's existing Travel Inn chain. The combined business adopted the Premier Travel Inn brand until 2007, when it was simplified to its current name. It has steadily acquired additional sites, including several premises previously operating as Holiday Inn or Golden Tulip. The company has a nationwide marketing alliance with the UK's main national tourist boards, and has extended the brand into the international market through joint ventures in the United Arab Emirates and India. The group also operates business centre chain Touchbase, mostly within hotel outlets. Until recently Whitbread also held the UK franchise for the Marriott hotel brand, operating more than 60 upmarket Marriott hotels. In 2005 it announced plans to exit that sector by transferring the business back to Marriott International. It sold its remaining stake in 2006. Sales for the Premier Inn division were £602m in the year to March 2009.

Until comparatively recently, Whitbread Restaurants was the UK's leading full service restaurant business, but this business has been scaled back in favour of outlets that exist alongside or within its Premier Inn outlets. In 2006, the group sold a portfolio of almost 240 freestanding pub restaurant sites to Mitchells & Butler, and it has continued to Most of the group's restaurants operate under two chains: Brewers Fayre, with 130 outlets, specialises in what it calls "informal contemporary food in a stylish environment", mainly targeting a family market; and Beefeater, also with 130 locations, is best-known as a grill restaurant. in order to focus on outlets located near to one of its existing Premier Inn hotels, or where there was the potential to build one. A new concept, Table Table, began testing in 2008 in converted outlets of Brewers Fayre, and has since been rolled out to 105 locations. It offers differently themed separate eating areas. The group's latest concept is Taybarns, offering a wide selection of different freshly prepared meals served from the counter at a single all-you-can-eat price.

The third main brand in the restaurant group was Costa, now the UK's #1 coffee shop chain by outlets (ahead of Starbucks), with 880 outlets. Founded in the early 1970s by brothers Sergio and Bruno Costa, it was acquired by Whitbread in 1995. Costa also has a well-established importing, roasting and wholesale operation, and has opened around 400 joint venture or franchised outlets in 18 countries in Eastern Europe and China since 2005. Towards the end of 2009, the group acquired Coffeeheaven, which operates around 90 coffee shops in Poland and four other Eastern European markets. The company has been the sole sponsor of what was formerly The Whitbread Book Awards since the early 1970s. The scheme recognises popular British fiction, awarding a total prize fund of £50,000. The event was rebranded as the Costa Book Awards in 2006. The restaurant group reported sales of £460m in year ending 2009, with a further £175m from Costa. The business was sold in 2018 to Coca-Cola.

Whitbread's other restaurant businesses have been sold. Pizza Hut UK was for many years a joint venture between Whitbread and Yum Brands. Whitbread sold its shares back to Yum in 2006. The group also sold its franchise for the TGI Friday's theme restaurant chain back to owner Carlson Companies. The company sold its chain of Maredo steak houses in Germany to private equity investors in 2005. The Pelican Group, the umbrella for a cluster of other brands including Cafe Rouge, Bella Pasta and Mamma Amalfi, was sold to management in 2002. Separately, it sold its shareholding of just under 24% of Britvic Soft Drinks in December 2005.

Through a third division, Whitbread was until recently a leading operator of private healthcare and fitness centres in the UK under the David Lloyd Leisure Clubs brand, with almost 70 clubs, and some 375,000 members. The business was sold in June 2007 to property investment company London & Regional for £925m.


For the year ending March 2009, Whitbread reported sales from continuing businesses of £1.3bn up 10%. Including the contribution from divested operations, total revenues were £1.4bn. Reported pre-tax profits were £375m, including a gain of almost £200m on the sale of the pub restaurants. Virtually all revenues were generated in the UK.


Samuel Whitbread set up in business in 1742, founding a brewery in the City of London. The business prospered and in 1750 Whitbread moved to bigger premises in Chiswell Street, EC1 (which remained the site of the company's HQ until 2005). Whitbread's speciality was "porter", a cheap, heavy beer which could be stored in casks longer than lighter ales. By 1760, the Whitbread factory had become London's biggest brewer of porter, turning out 65,000 barrels a year. By 1790, production had risen to 150,000 barrels, establishing Whitbread as the country's biggest brewery. When he died in 1796, he was one of the wealthiest men in Britain, leaving an estate of well over a million pounds, then a huge sum. His son, also Samuel, was less interested in brewing and threw himself instead into politics, becoming a member of Parliament and an outspoken supporter of the Reform movement.

During the 19th century, the brewery turned its attention to other beers, launching a line of ales in 1834, and bottled beers from 1870. The company also expanded into Europe, opening depots in France, Belgium and the Netherlands. By the start of the First World War, Whitbread was producing 1 million barrels a year, more than half of it in bottles. In 1948, the company went public, and began to acquire a series of regional breweries and their "tied" pubs. In 1962, the company acquired the Thresher off-licence chain as an outlet from which to sell its own and rival beers for home consumption. The company was also one of the first breweries to exploit the public taste for lager, winning the UK licenses for Heineken (in 1969) and Stella Artois (in 1976). By the mid-1970s, Whitbread controlled 20% of the British lager market. Further expansion came with the move into the wine and spirit trade. In 1975, Whitbread acquired Long John International, a Scottish distiller whose brands included Laphroaig whisky, Plymouth and Seagers Gin. In 1984 Long John acquired distillers James Burroughs, which produced Beefeater Gin. The whole spirits business was sold in 1989 to Allied Lyons (later Allied Domecq), and the proceeds from that sale funded the acquisition of the Boddingtons Brewery in Manchester the same year.

At the same time as developing its drinks portfolio, the company had been quick to find other ways to build its estate. In 1974, Whitbread launched its first Beefeater Steak House, catering to a family market. Towards the end of the decade, it adapted part of its pub estate to launch the Brewers Fayre brand, serving meals alongside drinks. This approach was developed further with the acquisition of the UK licenses for Pizza Hut in the UK, a joint venture with Tricon Global Restaurants in 1982, and TGI Friday's (licensed from Carlson) three years later. In 1989, the group used its huge pub estate as the platform for the launch of its first Travel Inn, combining food and hotel accommodation. This was followed by further expansion of the restaurant group through acquisition of the German equivalent of Beefeater, Churrasco, in 1990, and Maredo Steak House in 1994. The Thresher's off-licence business was expanded with the takeover of Peter Dominic and Bottoms Up in 1990.

By the early 1990s, Whitbread had built up a wide ranging leisure and drinks group. Increasingly, however, the restaurant and leisure division was becoming the core of the business. A series of further acquisitions strengthened the company's portfolio. In 1995 Whitbread bought David Lloyd Leisure, then the number one operator of private health and fitness clubs, as well as 16 Marriott hotels. In the same year the high street coffee shop chain Costa was purchased. In 1996, Whitbread expanded its restaurant business through the purchase of the Pelican and BrightReasons restaurant groups, adding brands such as Cafe Rouge, Bella Pasta and Dome. In the drinks division, the company won the UK license for Labatt's, Rolling Rock and Labatt Ice. Facing stiff competition from supermarkets in the take-home drinks sector, Whitbread merged its Thresher off-license group with Allied Domecq's Victoria Wine in 1998 to form joint venture First Quench.

By 1999 Whitbread was operating across five principal divisions - pubs, restaurants, hotels, leisure clubs and drinks. Drinks accounted for the largest proportion of sales (around 50% in 1998), but Whitbread was only #3 in a market led by Scottish & Newcastle and Bass. Pubs and inns generated around 30% of sales through an estate of some 3,500 outlets, of which around half were owned and managed by Whitbread, and the balance leased out to private partners. At the time this made Whitbread the UK's leading pub landlord. Later that year, the group announced plans to double the size of its estate by buying a further 3,600 pubs owned by Allied Domecq, as well as Allied's share of First Quench and of Britvic soft drinks, in which Whitbread was already a shareholder.

However, Whitbread's strategy was quickly thrown into disarray. The opening offer to Allied Domecq's shareholders was £2.4m, to be paid in Whitbread shares. However, the company quickly found itself in a bidding war with Punch Taverns, a private group backed by US finance group Texas Pacific. Punch initially tried to become a partner in the takeover, proposing that Whitbread sell on a third of Allied's pubs. When that offer was rebuffed, Punch recruited Whitbread's arch rival Bass to part-fund a higher cash bid for Allied Domecq's entire estate. Punch's revised offer was rejected by Allied, and so began a see-saw of steadily increasing offers from both suitors. By August the bids had reached more than £2.9bn, but the war had become vicious, with both sides throwing barely disguised insults at each other. Allied appeared to seal the issue by recommending the Whitbread offer to shareholders. But only days later, UK regulators threatened that they would have to investigate the proposed merger. This last minute obstacle unravelled the whole deal. Whitbread pulled out, and Punch took the opportunity to drop its price and carried off the estate for £2.75m. (In a final twist, Whitbread later used a last minute right of veto as an existing shareholder in Britvic to prevent Allied from selling its 25% holding in that company.)

After a brief period licking its wounds, Whitbread turned its attentions to its hotel and leisure businesses. The group snapped up another health club group, Racquets & Healthtrack, and merged it with David Lloyd Leisure. Shortly afterwards, it agreed a takeover of hotel group Swallow for £560m, rebranding Swallow's 38 four-star hotels under the Marriott name. Behind the scenes, the group was preparing for a further overhaul of its business. In 2000, Whitbread announced plans to sell off its heritage brewery business to Interbrew of Belgium for £400m. It was a neat fit, since Interbrew's Stella Artois was already Whitbread's biggest local brand, brewed under license. Once again, however, competition issues got in the way of a clean transfer: rivalry between Heineken and Interbrew prevented the Belgian company from taking over Whitbread's UK Heineken contract. Instead Whitbread was obliged to lease back from the Belgian company one of the breweries included in the sale and continued to produce Heineken under license until 2002. Separately, Whitbread sold its First Quench retail subsidiary to Nomura International for £225m.

Phase two of the overhaul came in November, when Whitbread announced it was also selling its 3,000-strong pub estate to concentrate on the restaurant and leisure business. The sale was finalised in early 2001 when Morgan Grenfell Private Equity agreed to acquire the portfolio for £1.63bn. A year later, group's smaller bar and restaurants brands, including Cafe Rouge and Bella Pasta, were sold to management.

Last full revision 28th March 2018

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