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Whitbread, which owns the Costa coffee chain, says consumers are still struggling
THE UK's largest hotel and restaurant group, which wants to open a new site in Darlington, says it remains unconvinced over increasing consumer confidence after the summer weather dented sales in its Costa coffee chain.
Whitbread, which owns the Premier Inn chain and Brewers Fayre pubs, says trading was flat across the country, with consumers continuing to tighten their budgets and Costa suffering from the increasing temperatures.
The Costa division saw like-for-like sales grow by three per cent in 11 weeks to August 15, compared with eight per cent underlying growth between March and May, when customers looked to coffee to warm themselves up against the cold weather.
Whitbread revealed its underlying sales were up 2.1 per cent, compared with 3.1 per cent growth in the first quarter, though total sales increased by 10.8 per cent as it opened new shops, coffee machines, hotels and restaurants.
Andy Harrison, chief executive, said there was an obvious divide in the economy that was reflected in consumer spending.
He said: “Its clear that the London economy turned a corner some time ago.
“But its totally unclear to me what is happening outside the M25, and on the evidence I have seen I would say its flat.
“Wages are rising slower than inflation, particularly energy bills, and outside London the consumer has less money to spend.”
Mr Harrison blamed the changeable weather for Costa's growth fall, with last summer the wettest on record and the Spring the coldest in more than 50 years.
The coffee chain's underlying sales growth of 5.7 per cent across the 24 weeks to mid-August was also slower than the 7.1 per cent growth seen during the same period a year ago.
Mr Harrison said: “Short-term trading has been distorted by unusual weather, do not draw any conclusions from 11 weeks of trading.”
The company has plans to build a new 80-bedroom hotel in Darlington as part of a proposed overhaul of a former bus station, which could also include a nine-screen cinema and restaurants and bars, and already runs Premier Inn hotels in Darlington, Bishop Auckland and Newton Aycliffe, County Durham.
It said like-for-like sales in its Premier Inn division grew by three per cent in the second quarter, with total sales up 12.1 per cent across the hotel chain.
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