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Whitbread plans price rises to pay for living wage Whitbread plans price rises to pay for living wage
(about 1 hour later)
Whitbread, the owner of Premier Inn and Costa Coffee, says it plans to increase prices as it prepares to introduce the national living wage. Whitbread plans to increase prices at its chains as it prepares to introduce the national living wage.
The company said it would also "mitigate this substantial cost increase" by increasing productivity and cutting costs. The Premier Inn and Costa Coffee owner said it would also "mitigate this substantial cost increase" by cutting costs and increasing productivity.
It plans to announce more details later next month. Also on Tuesday, Manpower said the living wage was sending "shockwaves" through the UK labour market.
The company also said on Tuesday that sales continued to rise at both businesses. Its survey warned the living wage was prompting employers to cut back on hiring.
Like-for-like sales at Premier Inn rose 4.3% in the 11 weeks to 13 August, with a 4% rise at Costa. The 70p an hour increase to £7.20 an hour from April for workers over 25 was announced by the Chancellor, George Osborne, in the Budget in July.
Overall like-for-like sales were up 3.3% in the period. Manpower's survey of 2,101 employers found that UK jobs market was at its least optimistic level for three years.
James Hick, of Manpower, said some employers may seek to reduce the extra costs by taking on more younger or self-employed workers, who were not entitled to the living wage.
ExpansionExpansion
However, the company said that trading across its brands was weaker than expected in August compared with an "excellent month" in 2014. Whitbread said on Tuesday that like-for-like sales at Premier Inn rose 4.3% in the 11 weeks to 13 August, with a 4% rise at Costa.
However, Andy Harrison, chief executive of Whitbread, said it was on track to meet both full-year expectations and the company's growth targets. However, that was weaker than the 9.2% and 7.3% increases posted for the same period in 2014.
It plans to open about 5,500 rooms in the UK, some 220 net new Costa stores worldwide and to install 700 to 800 new Costa Express machines. Shares fell 3.6% to £45.42 in morning trading on Tuesday, making Whitbread the biggest faller on the FTSE 100.
Overall like-for-like sales were up 3.3% in the 11 weeks this year.
Andy Harrison, chief executive, said Whitbread was on track to meet both full-year expectations and the company's growth targets.
It planned to open about 5,500 rooms in the UK, some 220 net new Costa stores worldwide and to install 700 to 800 new Costa Express machines.
Whitbread also owns the Beefeater, Brewers Fayre, Table Table and Taybarns restaurant chains, where like-for-like sales rose 0.6%.Whitbread also owns the Beefeater, Brewers Fayre, Table Table and Taybarns restaurant chains, where like-for-like sales rose 0.6%.
The weak increase was blamed on a "soft pub restaurant market outside the M25".The weak increase was blamed on a "soft pub restaurant market outside the M25".
Shares in Whitbread fell 2.4% to £45.97 in early trading on Tuesday. The FTSE 100 member is worth £8.5bn.