Simply typing “going it alone” in to any search engine and a myriad of self-help books will appear, telling the reader they can usher in a dawn of success if they just believe in themselves. Out growing ones current environment and the need for a change of scenery seem to be the most common theme, an issue that has had obvious effect on the board of UK leisure blue chip, Whitbread.
Under pressure from activist investors, Whitbread has been forced to spin out the jewel in its crown, Costa Coffee, as its own separate entity. Owning Costa Coffee as well as the UK’s largest hotel chain, Premier Inn, Whitbread has found that it cannot provide enough single strategic focus for two completely unrelated businesses. Costa Coffee, with a value of c. £3bn, will become a separately listed company whilst Whitbread will keep hold of its other brands, giving it a total value of c. £8bn.
Costa has come a long way since it was founded in London in 1971 as a wholesale roasted coffee provider. Whitbread took over the company in 1995 and has never looked back, transforming it into a multinational chain of coffee outlets boasting 3,401 stores spread across 31 countries.
With such success it seems that Costa has almost outgrown its parent company now. The move to split had always been on the cards for a while and with two activist shareholders joining the board, the announcement has been pushed forward… better latte than never!
What a Grind first appeared in the Cumberland Place Newsletter for May 2018. Click here to view a PDF version.