Martin Flanagan: Whitbread wakes up and smells the headwinds

Whitbread is exposed to 'chillier winds' around the UK economy, writes Martin Flanagan. Picture: Contributed
Whitbread is exposed to 'chillier winds' around the UK economy, writes Martin Flanagan. Picture: Contributed
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You might think people would forgo their daily transfusion at the coffee shop and businesses would cut back on travel and hotel bills in these more straitened times.

Apparently not. Whitbread has announced Costa coffee like-for-like sales rose 1.1 per cent in its latest trading quarter following a 0.8 per cent dip in the previous three months. Meanwhile, its Premier Inn budget hotels sales lifted 4.7 per cent.

It seems when the going gets tough, the tough get a cappuccino. Whitbread’s shares rose sharply yesterday on the trading update, but, even so, its business model is patently exposed to the chillier winds around the UK economy.

• READ MORE: Whitbread reverses sales decline at coffee arm Costa

It has a labour-intensive structure vulnerable to the national living wage, just as cash-strapped salary slaves may consider whether the odd “little luxury” can be done without (that’s the coffee, not the Premier Inn) amid stagnant wages and rising inflation. We have been here before, of course, with the financial crisis and ensuing recession. But Britain’s omnipresent coffee shops came through those downturns pretty well.

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My guess is that it will be a halfway house. Whitbread’s UK same-floorspace sales could well grow, but with less momentum. And future growth will be based on chief executive Alison Brittain’s success in exporting the concept abroad.

Not at all app-y

Taxi for Mr Kalanick! The Uber boss has succumbed to investor pressure and resigned from the world’s biggest ride-hailing app which he co-founded in 2009. Game-changing business models are a cliche, but in Uber’s case it is legitimate.

• READ MORE: Under-pressure Uber chief executive Travis Kalanick quits

The problem is that the group’s exponential growth has been accompanied by massive opposition from taxi incumbents, and the business has been dogged by questions over Kalanick’s pugnacity, and its working culture, including allegations of sexual harassment and discrimination. There has also been the little matter of a US department of justice investigation.

The Silicon Valley giant is worth more than $60 billion, but has punctures in two of its wheels. Currently, Uber has no chief executive, no chief operating officer, no chief financial officer and no general counsel.

Almost like a taxi without a driver.

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