Hardboy
02 Feb 2018
Today's Drop I 'm sure I must have caused it. I stopped off at a Brewer's Fayre this morning for a Breakfast and some one must have seen I only had a continental rather than the full English.
Hardboy
26 Jan 2018
Free water refills [link] may not do much for the bottom line directly, but it's good PR.
Hardboy
24 Jan 2018
Re: Premier Inn award I'm reading this in my Premier Inn room in the Leeds Arena PI. It lacks hot & cold running chamber maids, but otherwise it's perfectly adequate.
Triggers broom
24 Jan 2018
Premier Inn award [link] award for Premier Inn at the 2018 BTAs for Best Midscale Hotel Brand.
shieldbug
23 Jan 2018
Costa Express From the January 2018 trading update:"Costa Express has continued to perform exceptionally well in the UK with total sales growth of 20.4% in the third quarter to almost £60 million (YTD: 18.7% total sales growth to over £150 million)"Assuming they have 7,000 UK Costa Express machines (8,046 UK + International and allowing for rollout of new machines during this period) that would suggest revenue of £8,500 per machine in the last quarter. Revenue is not profit and its not clear what the rental costs are for these machines. Costa Express has potential to make the brand truly ubiquitous in the UK. Easy to grow and profitable too.
nk1999
18 Jan 2018
HL view after the Trading Update today:"20 years ago over 50% of Whitbread revenues came from brewing and pubs. Today, pubs are off the menu (bar those supporting the hotel estate), while brewing is long gone. In their place are more than 2,300 UK coffee shops, and a 70,000 room hotel estate. Quite the transformation. Costa revenues grew from £143m in 2005 to £1.1bn in 2015, compound annual growth of 23% a year, while Premier Inn checked in growth of 12%. However, while more recent performances remains respectable, there's been a notable slowdown in growth.There are several short-term reasons for that, ranging from weakness in the London hotel market to lower city centre footfall hitting Costa's high street shops. New products, including self-service coffee machines and the stripped down 'hub' city centre hotels, may go some way to alleviate those pressures.With less than 10% market share in key segments such as London hotels, there's still room for both brands to grow domestically in some areas. However, on the whole Whitbread is running out of new places to pitch up. That has inevitable consequences for the pace of future growth. Major cost headwinds in the UK business are adding to the pain, and even the group's impressive cost control has failed to keep margins heading in the right direction.Overseas expansion seems a reasonable response. So far Premier Inn's international expansion has focussed on Germany. Costa is further down the international road, and already turns a small profit. Especially positive noises are coming out of China. We see no reason why both couldn't sell as well internationally as they do at home, but building international brands from scratch takes time. In the immediate future the challenge will be guiding a more mature UK business through less favourable economic conditions Whitbread shares trade on a prospective yield of 2.8% and a price to earnings ratio of 14.3 times (a slight discount to its ten year average). "
gamesinvestor
11 Jan 2018
Bond Yields Evans Pritchard is ever the alarmist and insists on smothering the reader with his knowledge of useless technical jargon and historical references. [link] It maybe though, that there is something in this and the cycle is indeed on the turn. Personally I'm 50:50 on the viewpoint, as demographic shifts in age are still with us, but I have to admit to have been moving gradually away from some of the indebted (share buy back artists) companies of late. Games
gamesinvestor
09 Jan 2018
Re: China/India coffee OK Getting somewhere.The coffee issue wasn't India or China, but in the Middle East, now resolved without brand damage.India has 60 outlets all FranchiseChina has 425 outlets (so not so small beer at all) - 9 of which are Franchise.As HB points out, the growth potential is pretty big, assuming they can make them all profitable of course.Games
Hardboy
09 Jan 2018
Re: China/India coffee Small beer it may be, but a country with the 2nd largest population in the world; much younger than China's, with a rapidly growing middle class, has huge potential for the Costa type offering. I hope they sell tea as well as coffee!
gamesinvestor
08 Jan 2018
Re: China/India coffee Bill - It all looks a little small beer so to speak, but I should be able to find out.There is a good mention in the annual report on China, but precious little w.r.t India.Share price drifting down again.Games
Bill1703
08 Jan 2018
Re: China/India coffee "... Costa has been in India since 2005.... It seems pretty well established as a master Franchise..."Great detective work, Sherlock! Difficult to find any mention of it from WTB itself... anything at all, to an almost suspicious degree. In any event, it can't be making any returns of any note, given that Costa's overall international profits are small enough at the moment - and that includes places where they ARE happy to admit to!"Typically the franchise agreements are set such that you source all of your marketing, products and formats from the principle for a number of reasons... "Yep, but it could be uneconomic and impractical to supply them with Costa's own coffee, if they don't produce it locally... If it got big enough for them as a market I would imagine that could change, but I am guessing that overseas efforts are mostly focused on China now. I would guess that they (WTB/Costa parent) would have some quality control and oversight on coffee sourcing, to make sure they're not just boiling up a big heap of Red Mountain...The key question for your sources is, what do Starbucks do in China (eg. with coffee supply) and are Costa doing anything materially different? Given they are clearly setting out their stall to replicate what Starbucks have achieved over there. But all in all, not seeing anything here - at this stage - to move the needle at all on overall stock appraisal or valuation...
gamesinvestor
08 Jan 2018
Re: China/India coffee "News to me, Games - partly as I didn't know they had ANY coffee units in India"Bill - Costa has been in India since 2005[link] seems pretty well established as a master Franchise -- I think there might be a dispute but I'm not clear on any facts.Typically the franchise agreements are set such that you source all of your marketing, products and formats from the principle for a number of reasons, the principle one might be to maintain a certain standard of product and image with the customer and also typically to maximise the returns to the company.I'll find out a bit more.Games
Bill1703
08 Jan 2018
Re: China/India coffee "Rumour has it that these units are not buying their coffee via Costa according to franchise agreements -- doesn't surprise me but not great for international returns I suspect... No facts here, just hearsay and speculation - but coming from a close source."News to me, Games - partly as I didn't know they had ANY coffee units in India, or indeed franchise units in China (I thought they now had full control in South China, and an ongoing j.v. partner in North China). But I am prepared to be enlightened...Maybe it is cheaper for the Chinese units to buy their coffee from elsewhere, and thus accretive to returns? Maybe Costa doesn't actually produce and supply coffee to these retail markets at all, they way they typically do in the UK? If they don't, maybe it's something they plan to introduce over time, as and when they buyild their presence? "I wonder if Crozier is on board to do a deal quickly and offload Costa?"I doubt it... I suspect they would much rather hold onto it for at least the next 2-3 years. And Crozier (who is non-exec, lest we forget) isn't really a dealmaker, more of a transformation / turnaround sort of guy, at least by his past CV - he didn't even manage to sell my ITV for me in the seven years he ran that! But never say never, I suppose... maybe they'll get an offer they can't refuse?!
gamesinvestor
08 Jan 2018
China/India coffee Rumour has it that these units are not buying their coffee via Costa according to franchise agreements -- doesn't surprise me but not great for international returns I suspect.I wonder if Crozier is on board to do a deal quickly and offload Costa?I'm guessing this isn't as simple or as smooth as the coffee, given that the funding for the coffee expansion comes from the parent company, how might that change I wonder?No facts here, just hearsay and speculation - but coming from a close source.Games
Bill1703
03 Jan 2018
Barclays on WTB break-up potential Edited highlights below..."What if Whitbread decides to sell Costa and its real estate? We estimate that under such a scenario the ‘sum of the parts’ value could be £47 in our upside case to £57 in our blue sky scenario.While ROCE has been declining for Costa, the levels are still very high at c40% (EBIT ROCE) for the UK stores. These units generate strong cashflows and, for certain investors, this could be a key attraction. While Whitbread management is currently embarking on its own turnaround efforts, other buyers may also have perspectives on how performance might be improved (particularly if there could be any shared best practice from other coffee shop brands that may be owned) ...."
