Whitbread’s boss has warned wages will be pushed up with a potential knock-on impact for prices if Brexit shrinks the pool of workers available to the owner of Costa and Premier Inn.
Alison Brittain, Whitbread’s chief executive, said about a fifth of her 50,000 UK employees came from other EU countries , with the figureshigher in London and other cities and large towns. If there were fewer EU workers that would affect wages at Whitbread and other businesses, she said.
Announcing results for the first half of the year, Brittain said: “We are a company that grows new jobs by 3,000 every year so having a good labour pool to fill those jobs remains important to us. If the pool is smaller the price of that talent pool goes up. I suspect the whole of the wage bill will go up in the UK if the labour pool is restricted.”
Brittain said rising wages could put pressure on prices along with the increased cost of buying coffee following the sharp fall in the value of the pound. But she said she hoped an efficiency drive, including using technology to serve customers faster, would let Whitbread keep prices stable.
“We price our coffee to customers in a competitive marketplace. It’s not the first lever we choose to pull. We haven’t got a history of price rises in the way our competitors have raised prices pretty much every single year.”
Pre-tax profit rose 3.4% to £263.6m in the six months to 1 September as revenue rose 8.1% to £1.56bn. At Premier Inn hotels, Whitbread’s biggest business, profit increased 8.9% but Costa’s profit fell 4% as it spent on IT, store revamps and paying the “national living wage”.
Brittain said there had been no noticeable effect on her business from the vote to leave the EU but that Whitbread was prepared for the economy to slow next year, as many economists expect. Brittain said in June that Whitbread would consider slowing expansion if the UK chose to leave the EU but she said plans remain unchanged after the Brexit vote.
Whitbread shares, down 15% this year, fell 3.7% to £37.02.
Brittain said Costa, which has 2,121 UK branches, has opportunities to expand because coffee drinking in the UK is still less popular than in other European countries and Costa is experimenting with new products and formats.
Costa has opened a second “finer” branch in Wandsworth, south London, after a successful trial in London’s Covent Garden. The branches have later opening hours and serve wine and a wider range of food, including the hipster’s favourite, avocado on toast.
Brittain said the format aimed to tap into the growing market for independent coffee shops and would serve single-origin coffee alongside Costa’s traditional blend.
However, she said she was wary of trying to be too trendy. “I don’t think we are going too hipster at this stage. What happens in Bradford or Bournemouth high street is quite different from Borough Market. Some of the things we see in London might well become the trends of the future. We should be leading the way to bring some of that innovative stuff to the mass market without going too quickly for our customers.”
