Whitbread is undertaking a £1.5bn sale-and-leaseback programme, slimming its capital expenditure (capex) by £1bn and axing 3,800 jobs, following a strategic review.
The Premier Inn-owner has unveiled a new five-year plan to revamp the business’s finances, stating that the move is “in light of significant cost increases in the form of business rates and National Insurance”.
Under the plan, Whitbread, which also owns food brands Beefeater, Brewers Fayre, Bar and Block, and Cookhouse and Pub, will sell and leaseback £1.5bn of its freehold property to fund future growth, reducing the freehold proportion of its estate from 50% to between 30% and 40%.
Whitbread plans to slash net capex to £200m to £250m per year, a £1bn reduction compared to the company’s previous five-year plan, and will “increasingly look to grow on a leasehold basis”.
The company also announced plans to replace all of the group’s remaining 197 branded restaurants with hotel-based integrated food and beverage offerings, building on the 2024 sale of 51 underperforming restaurants.
“We always challenge ourselves to improve and, in light of significant cost increases in the form of business rates and National Insurance, as well as the implied market discount to our inherent value, we’ve looked hard at the options open to us to maximise value creation over the medium and long-term,” said chief executive Dominic Paul.
“Owning a significant proportion of our property is a unique strength that powers the growth of Premier Inn, while supporting our resilience as a business, underpinned by a strong balance sheet. But we can improve our approach.
“We will refocus our capital spending and recycle more of our freehold real estate, driving increased margins and returns, reducing our capital intensity and increasing cash returns for shareholders.”
Paul added: “By making our assets work harder and focusing on the highest returning projects, we will be able to continue to take advantage of constrained supply to strengthen our position in both of our core markets, while at the same time delivering attractive financial outcomes for shareholders.”
The 3,800 redundancies represent 12.6% of its 30,000 UK and Ireland workforce.
Last year, the company came under pressure from activist investor Corvex, a New York-based hedge fund, to change course in response to the government’s business rate reforms.
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