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Whitbread Plans to Expand Costa Coffee Chain; Full-Year Profit Jumps 75%

Whitbread Plc plans to expand its Premier Inn and Costa Coffee chains in Britain and overseas as the slump in property prices creates opportunities.

Whitbread is expanding Costa in China, India, Russia, the Middle East and Central Europe as well as the U.K. as it adds franchises and joint ventures abroad. Premier is expanding its budget chain as real estate costs drop and it seeks to add leisure travelers to its business customers.

Costa, the second-biggest coffee chain behind Starbucks Corp., plans to add 250 outlets this year and about 1,400 by fiscal 2015, the Dunstable, England-based company said today. Premier will add 29 outlets this year, from its current 588. Full-year profit rose 75 percent, boosted by Costa gains.

“We are able to get our hands on sites which are better located than when the property prices were so hot,” Finance Director Chris Rogers said in a telephone conference call. The costs of adding a room at Premier are up to 15 percent less now, from a previous 40,000 pounds ($60,860), he said.

Whitbread declined 35 pence, or 2.2 percent, to 1,548 pence at 9:32 a.m. in London. The shares have risen 9.3 percent so far this year, giving it a market value of 2.7 billion pounds.

Whitbread added 312 Costa outlets during the year and sales have been spurred by a “flat white” coffee introduced in January. It also acquired Coffeeheaven International Plc to expand in Eastern Europe.

“People see it as an affordable treat,” Rogers said, with the average ticket about 3.70 pounds.

Net income was 161 million pounds, or 96.74 pence per share in the year ended March 4, from 91.8 million pounds, or 90.69 pence per share a year earlier, the company said. Tax expenses dropped to 48 million pounds from a year-earlier 108.3 million pounds.

EasyJet Plc Chief Executive Officer Andy Harrison joins the company as CEO in September, replacing Alan Parker.

To contact the reporter on this story: David Altaner in London at daltaner@bloomberg.net

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