The owner of Premier Inn said third quarter sales fell as it works to revamp many of the restaurants across its UK estate.

Whitbread (WTB.L), which also owns the Beefeater restaurant chain, said sales during the three-month period ending November 28 dipped 2% year-on-year to £763 million.

That was driven mainly by a 14% fall in sales from its UK bars and restaurants, many of which it is either converting or selling in favour of hotel rooms.

Chief executive Dominic Paul said on Thursday the company is making “good progress” against the plan for its food and drink offering.

The £500 million plan, which executives dubbed “Accelerating Growth” and announced in April last year, involves converting 112 branded restaurants and selling 126 more.

The company hopes this will help it build about 3,500 extra hotel rooms, eventually reaching 97,000 rooms in total.Whitbread also owns the Beefeater restaurant chain (Andrew Matthews/PA)

Whitbread’s hotel business fared better in the three months but even there sales were only up 1% on the same period in 2023.

That was mainly driven by roughly one-fifth growth in its German business, while UK sales failed to surpass 2023 levels.

The group said inflation, coupled with policies in the October Budget, are expected to push up costs slightly across its £1.7 billion set of annual outgoings.

Chancellor Rachel Reeves announced a rise in national insurance contributions for companies – a tax which makes it more expensive to employ people.

Whitbread said it would push cost inflation up by between 2% and 3% across the group, after taking into account a raft of cost-cutting it is carrying out at the same time.

Mr Paul continued: “The structural shift in UK supply has meant that Premier Inn is continuing to sustain the significant gains made since the pandemic.

“Whilst forward visibility remains limited, the favourable supply backdrop, together with our brand strength and commercial initiatives, means we are confident that we can continue to outperform the market.”

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