Leisure giant Whitbread today said its coffee business Costa continued to thrive after a 42% jump in the division’s half-year profits.
As well as the opening of new stores, the chain has benefited from the success of new drinks such as its extended iced coffee range and the roll-out of coffee machines at motorway service stations.
Underlying profits at Costa hit £27.8 million in the six months to September 1 after it opened its 2,000th store, including its 100th in China.
The strong performance of Costa and a 5% like-for-like sales increase at budget hotel chain Premier Inn helped Whitbread’s underlying pre-tax profits rise 15% to £174.9 million.
The group said its performance continues to fluctuate on a month-by-month basis while the consumer environment remains ``challenging''.
Whitbread said it aims to double the size of its Costa coffee business in the next five years and increase the number of Premier Inn rooms in the UK by 50%.
The group said its expansion plans are on course and it will have created 2,500 new jobs by the end of its financial year.
Costa opened 167 new stores in the half year, 85 of which were in the UK. It aims to bring the number of Costa outlets to 3,000 over the next five years.
Its performance was boosted by a 44% increase in sales of its Iced Cold Costa range to £12.4 million, while it has also recently introduced a Costa Light offer, which has fewer calories and less caffeine.
Costa also bought Coffee Nation earlier this year, which operates some 900 self-service vending machines in service stations.
It is rebranding the machines under the Costa Express banner and aims to have opened 250 new outlets in the second half of its financial year.
Whitbread added that a broader range of rates helped Premier Inn to attract more business and leisure customers. The number of rooms sold increased 7% to 6.3 million, boosted by the opening of 11 hotels in the period.
The strong performance of Premier and Costa helped offset a sales decline at its pub restaurants business, which has suffered as customers cut back on spending.
Its Brewers Fayre brand is outperforming its higher priced Table Table and Beefeater brands, it added.