Whitebread shares tumbled on Thursday after the hotel group posted a 7% decline in operating profit in the 26 weeks to 28 August 2025.
Group revenue declined 2% as growth in the UK hotels flatlined and food and beverage sales fell. Although the fall in food and beverage sales was expected, the 11% drop in sales weighed heavily on overall sales for the UK, which fell 3%.
Germany fared better, but the region makes up just 10% of sales.
“Investors had clearly expected better service from Whitbread, with the shares down sharply in early trading,” said Chris Beauchamp, Chief Market Analyst at IG.
However, one wonders whether Whitbread’s 9% decline presents a buying opportunity for investors.
The company is undergoing several strategic improvements that should position it well for growth when the UK economy picks up.
“Premier Inn owner Whitbread shrugged off its first quarter weakness to deliver first half UK accommodation sales in line with last year,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“The second quarter market recovery was supported by a string of events in London and that’s continued into the second half, with the likes of Lady Gaga, Oasis and the less glamorous Defence and Security Equipment International conference keeping demand for hotel rooms high.
“Once again Premier Inn outperformed the competition, with rooms on average generating £6.10 per day more than other midscale and economy operators. That wasn’t enough to offset a double-digit drop in food sales however, mainly driven by a slimming down of the group’s pub and restaurant offer. The drop in revenue and increased finance charges saw underlying pre-tax profit fall by 7% to £316mn bang in line with market forecasts.”
At 16x earnings, Whitbread is neither cheap nor expensive. That said, a recovery in earnings growth could quickly make the group look good value.