Whitbread plc

Alison Brittain - Chief Executive Nicholas Cadbury - Group Finance Director Dominic Paul - Managing Director, Costa

Lena Thakkar - HSBC Richard Clarke - Bernstein Tim Ramskill - Credit Suisse Jeffrey Harwood - Stifel Nicolaus Monique Pollard - Citigroup Tim Barrett - Numis Rachel Fox - Goodbody Anna Barnfather - Liberum

Okay, we’re ready.

Good morning, everyone, and thanks for dialing to Whitbread’s first quarter trading update. I’m joined by our Group Finance Director, Nicholas Cadbury; and Costa MD, Dominic, is here with us - Dominic Paul is here with us this morning.

We started the year with total group sales up 3.2%, driven by investment in new Premier Inn hotels, coffee shops, and Express machines. This growth, along with our group-wide efficiency program to offset the sector-wide inflationary pressures means that we’re expecting to deliver full-year performance in line with this year’s expectation.

Since our announcement to demerge Costa from Whitbread at our full-year results in April, we’re pleased with our initial progress. We have a dedicated project team in place, appointed external advisers, as well as continuing the core infrastructure and efficiency program work that was already underway.

We’ll update you further at our interim results in October; however, we remain committed to demerging Costa as fast and as practical and appropriate to optimize the value for our shareholders. Turning first to quarter trading in Premier Inn.

Premier Inn in the UK has continued to gain market share with total accommodation sales growth of 4.3% in the quarter, delivered by ongoing investment in attractive new hotels and extensions, which we expect to mature to levels of returns in line with the current estate. [Indiscernible] market remained subdued in the first quarter due to a combination of high levels of supply growth, including significant openings of our own, and the strong performance of the market this time last year when the weak pound encouraged inbound tourism.

Consequently, Premier Inn delivered flat like-for-like sales in line with the market. Levels of supply growth and the annualization of last year’s influx of inbound tourism have impacted London more, so the market was softer here than in the region.

However, Premier Inn’s significant capacity addition of 13.8% meant that we grew accommodation sales by 6.3% well ahead of the market. The London market continues to be an attractive long-term opportunity, given strong occupancy and higher average room rates, and we have a lower market share in London, so we plan to increase our presence and take advantage of the opportunity through our new hotels, including our compact hub hotel, which continued to perform extremely well and mature very quickly.

The regional market has been more robust as domestic business demand has continued to grow and Premier Inn’s market share is increasing through new hotels and extension. In addition, the early success of our business booker tool is attracting more corporates to book through our dedicated platform, making them more loyal to the brand.

Forward bookings have improved recently, and we’re confident of achieving our room opening target of 4,000 to 4,500 rooms this year in the UK and Germany, as well as our 85,000 UK room target by 2020, with over 72,000 rooms open today and more than 14,000 room secured in the committed pipeline. Our food and beverage sales had a tough quarter with like-for-like sales declining 1.9%.

The adverse weather during the spring led to lower footfall across the industry and the timing of Easter also impacted sales. However, we’re confident that our menu and pricing reviews, as well as new targeted promotions will lead to improvements on our first quarter performance.

In Germany, we’ve secured another hotel in Mannheim. This brings the committed organic pipeline to 12 hotels, which along with the acquisition of 19 hotels announced in February means our total pipeline is now 31 hotels and almost 6,000 rooms.

In the year ahead, we expect to open three hotels from the pipeline, and our existing hotel in Frankfurt continues to perform well with good occupancy, good room rates, and good customer scores. Our property team in Germany remains active in looking at all opportunities to accelerate and extend our pipeline further, including more freehold and leasehold sites for organic expansion, along with further bolt-on acquisitions.

Moving on to Costa. We grew total UK sales by 5.2% in the quarter as we increased our market share through new stores and Express machines.

As we experienced in previous quarter, we’re seeing higher growth from our convenience channels, which offset this negative like-for-like sales in stores on more traditional High Street location, where the market experienced a retail footfall decline of minus 3.5% during the quarter. We continued to pursue our strategy to reweight our estate towards high-footfall and convenient locations, such as drive-thru travel locations and Costa Express, and we aim to sell more Costa Coffees to customers across the UK.

We expect the weaker consumer environment to continue throughout this year. However, it’s worth remembering that overall our high street stores remain very profitable and delivers very strong return on capital.

We continue to review the returns of all of our stores and have been actively managing the very short tail of underperforming stores over the last two years, and we’ll continue to do that. This is facilitated by our flexible lease structure.

We remain excited about our investment program and product innovation pipeline in Costa. Given the overall coffee consumption continued to increase, we can deploy capital at attractive returns and we’ve maintained our investment in new stores and refocused our refurbishment program.

The completion of our point-of-sale upgrade program in April [indiscernible], that’s also enabled us to introduce our first value bundled deal at lunchtime and to trial Click & Collect across 16 stores in London. We’ll be expanding this trial both in terms of number of stores as well as the range of menu items available through the app.

During the quarter, our food launch is focused on improved - on an improved range of savory snacks, as well as continuing to add to our core coffee range with Flat Black and Flat Mocha coffee complementing our Flat White family range. We’ve made a good start in terms of investments in our product range, digital capabilities, operational excellence, and further store network expansion, and we’ve got good momentum in delivering the plan.

In Costa, our international business continues to grow with good momentum in China, like-for-like sales grew in the first quarter and we’ve seen positive early signs from the increased investment in new stores and product. We’re on plan to open 100 stores this financial year and we’ll also close some underperforming legacy stores to improve the performance of the Chinese estate overall.

Costa Express grew UK sales by 9.6%, driven by machine additions over the last year and positive like-for-like sales growth. We started to enter attractive markets proactively in order to secure new partnerships and have a number of trials underway in Europe.

Across the UK and internationally, we’re confident of achieving our target of 1,300 machine installations by the end of the year. In conclusion, we remain committed to delivering our strategy to grow by investing in the structural opportunities in the budget hotel and coffee market, both in the UK and internationally.

Alongside this, we’ve made good early progress on the demerger of Costa, which we continue to do as fast, as practical, and appropriate to optimize value for shareholders. Our efficiency program and investment in strong capabilities in technology, procurement, property, and supply chain is ensuring that we can deliver our growth plans efficiency.

And despite the short-term trading conditions in some of our markets, we had a good start to the year and remain on track to deliver full-year results in line with expectations. Thanks for listening this morning.

Nicholas, Dominic and I will now be pleased to answer any questions that you have. Can we hand over to Q&A.

Good morning.

Good morning, Lena.

Good morning. I just wanted to ask three questions actually if that’s okay.

Firstly, in terms of Premier Inn, I’ll go one at a time if that’s okay. Could you just elaborate on the comments around being in line with the market.

I’m just wondering which metrics you’re comparing there?

Okay. Nicholas, do you want to pick that up?

Yes. It’s in line with our expectation.

So if you just look at our total sales in Premier Inn, accommodation sales is roughly over 4%, which is actually ahead of the market overall. Our like-for-like sales, which is what we normally kind of - which is, as you know, what we measure ourselves on what was fairly flat, minus 0.3, and the market is flat as well, the mid scale and economy market was flat as well.

So that’s what we’re referring to when we talk about our like-for-like performance overall. As you know, it was a fairly soft market in London overall.

The market was down 3% overall RevPAR. Actually, our sales were up 6% overall, and we’ve added 25% capacity over the last two years, 13% over the last year.

So actually we think, we had - although London market was soft, we actually had a good performance overall. And the regions, the market was a little bit better than London, it was up 0.9%.

Our like-for-like was up 0.5% or thereabouts, but our total sales in the region was up by 4% overall, again so ahead of the market.

But why wouldn’t that compare the market RevPAR to your RevPAR perhaps, like-for-like RevPAR if want to strip out the…?

Because we’re really focus on opening extensions. And when we open extensions, that’s - that dilutes our RevPAR overall.

[indiscernible]

That’s what we’re expecting, like-for-like. I think we’ve kind of flagged before that really about 1.5% of where the market is for RevPAR versus our RevPAR, because of that point that’s roughly where we are at the moment.

Plus, of course, so there’s - well, it’s two things. So remember, we’re one of the few companies that can do extensions and that path of earning the freeholds and having control of the estate, and the extensions are pretty low risk for us, because we already know that there’s high demand for a particular location.

So we know we’re turning away business two or three nights a week. And so putting the extension on, we know that we’ll have good occupancy when we sell it, but it reduces RevPAR and increases profit and revenue.

And the same goes if you take a London position where we opened a lot of space. And we - our aim is to get the total sale number across all of our space up, and we know that we do cannibalize an existing hotel when we open one nearby.

And in London, they’re not too far away from each other. But we know also that in year two that the original hotel comes back.

So we know it’s good business overall, and it drives an increase in potential [ph] sales in like-for-like accommodation sale, I mean, returns for us - returns profile remains constant throughout. So that is the way.

We were quite unique in the way that we run our business. If we have no stock, no supply, no extension, we’d be driving only occupancy and rate, but that’s not how we run the business.

We’re really focused, Lena, as you know, at driving return on capital and the best value. And if we just focus on RevPAR, we wouldn’t be maximizing that.

It’s about opening a space, getting good returns from that new space has been very effective, that’s why our like-for-like is more relevant.

Sure. I mean, I wasn’t questioning the logic of extensions, et cetera.

I was just - from a - for comparison to me, it seems like the like-for-like is flatter, but maybe we can take that offline. And secondly…

The like-for-like RevPAR versus our total like-for-like has been roughly in line with where it’s been for last two or three years.

Okay. Secondly, just on Costa, I know you’ve made a comment in the statement, but if you could update us on the demerger plans, not so much the internal processes, but interest that you receive.

And then also, on Costa, obviously, it’s been quite a weak quarter. Perhaps you could give a bit more color on how the actual High Street stores have behaved and also when you expect some of the initiatives around food, Click & Collect, and tech to start paying off?

Right. So the answer to your second question, we’re quite sure which is in April we announced to demerge within 24 months and as fast as practical and appropriate to do, and we’ve got range of activities, which we’re working on.

And both the program, the project itself to demerge, which is - which we’re keeping away from the operational team and then the operational teams delivering both their trading performances on the ongoing transformation program. And I have nothing further really to update you on that other than that, which I said already.

We’ll give you further updates at the next results presentation in terms of anything more we have to say then. And on the question of Costa, I mean, that footfall on the High Street, as you know, from the external data in the quarter was down 3.5%.

And clearly, on our High Streets, we have been negative like-for-like and that’s compensated to some extent by our changing mix, which is an active activity, where we’re looking to put more of our estate into high growth and high football channels like drive-thru’s and travel locations, et cetera. And so you see our openings reflect the new pattern of openings.

On the High Street themselves, even if the like-for-likes have gone back, the stores remain very profitable. So unlike some of the issues you see in retail at the moment where the stores themselves are unprofitable and they’re on long leases, we have profitable stores with high return on capital, a very, very slow tail of unprofitable stores and we have a very flexible lease structures so that we can churn where we need to with five-year break in most of our leases, so our average lease is much lower than that as you could work out.

So overall, that - I guess, that’s a summary of how the High Street fits into the remaining part of our business. And in terms of our initiatives, lots of those initiatives are having good impact in and of themselves.

But they’re being launched into a world where it’s quite trust trading and consumer environment, and for example, Click & Collect that we have - it’s a very small trial. We’ve been running, I think that specifically that with 16 stores, but not marketed.

We’re about to increase the product set on the app, so that it allows personalization and people can all have different milks and different styles of coffee that will happen in the next few weeks. And then we will roll that out to a much larger store base for a much bigger trial as we go through the second-half of this year.

We’re very much in the operational testing parts at the moment.

Yes.

Right, okay. Sorry, one last one.

You say you expect the full-year to be in line with expectations. Could you just tell us what those expectations are and, in particular, what your sort of projection is for top line trends around Costa like-for-likes and RevPAR?

If you can give some sort of a feel for that, that would really be helpful? Thank you.

Yes. I mean, if you look on our website, we’ve got PBT about 6 and 9 is the consensus for the beverages [indiscernible] that we’re comfortable with at the moment.

I think, if you look in terms of - if you look it through the year, we’ve made a comment in the statement that we’ve seen an improvement in our forward booking sales at the moment. Our forward booking sales are never direct lead into performance overall.

But we are seeing kind of some positive signs there at the moment. And what we also know is, as you go through the year, our comparatives get easier say, for example, in London this time last year in the first-half, we were about plus two.

In the second-half actually, minus 5 in the second-half in London. So the comparatives get easier as well.

The comparatives get easier in Costa as well although we’re just a bit - a little bit more cautious there about what consumers buy, which is overall. I’d probably leave to…

Actually, yes, and we changed expectations on like-for-like in Costa, but Premier Inn has got good forward momentum.

Okay, great. Thank you very much.

That’s right. Can we move on and take any questions.

Hi, good morning.

Hi, Richard.

Three questions from me, if I may. One, I’m going to repeat a question I asked, I think, at the last results session about so now you’ve got the kind of more standard like-for-like presentation.

The maturing effect you’ve kind of been opening around the sort of 4,000 rooms a year for the last few years now. So simple math would imply there’s sort of dilutive effect would just begin to kind of balance out against the maturing effect if your hotel rooms are maturing after one year like you expect.

So you can maybe talk to how we can balance that up and why you’re still saying a dilutive effect from extensions and newbuilds? Second question, on Costa unit growth.

I know you don’t reiterate every piece of guidance at every quarter. But are you still sticking to the kind of 230 to 250 new stores or are you thinking you might close a few more High Street stores this year and you still think…?

Yes, Rich, I’ll do that one quickly, Richard. Yes, we’re sticking to previous guidance.

Okay. And then the last one, just on - we’ve seen Starbucks talk about how they’re really suffering in the afternoon coffee sales.

Are you sort of seeing a similar effect in the UK that it’s the afternoon that’s really sort of dragging you down at the moment?

Yes, I’ll do that and then I’ll leave Nicholas with the like-for-like question on restaurant. And so - and on Costa, yes, if we were picking a day part that was weaker, I think, we’ve picked afternoon.

We already know we’ve introduced new offers into breakfast and into lunch during the course of the last year and they’ve gone well and we just done another lunch bundle, et cetera. But we haven’t done much yet on our afternoon and that will be our next thought process is what do we do with our afternoon activity in terms of tackling that day part.

So, yes, I think that is a weaker area than mornings and lunch time.

Yes, just in terms of the maturity, you’re right, so you do get a maturity benefit as you - and you’re going to get into that 4,000 room kind of consistency, yes, so that kind of evens out. But the only thing I would say, Richard, is that what has happened is we’ve changed the mix of our openings.

So we’ve got a lot more openings in London right now. So I think, we’ve added about 25 capacity to our London over the last years and 14% over the last year.

So the mix has changed. And, of course, we have opened capacity in London in a soft London market.

Now we’re still getting above 80% occupancies and it’s a very good strong market and we still get good returns in there. So over the long-term, I think, we’re very pleased with it, but it’s just the right - current - right now in a soft market you don’t quite see that kind of maturity in a place you may have seen it two years ago.

Okay. So you’re expecting two-year maturity in London rather than one year or something like that?

I’m just saying, right now. So normally, I think, we’ve kind of talked about a year ago that we were seeing about a year’s maturity in London overall.

But it’s just a bit soft. As you can see, the London market is just a bit softer at the moment, so naturally, we expect to see that it’s kind of slightly prolonged.

It used to be two, and it speeded up to one and it’s probably now and get back a little bit. Yes

Okay. Thank you very much.

Thank you.

Good morning, Julia.

Hi, guys, it’s actually Tim Ramskill here. [Multiple Speakers].

Guys, quick questions on Costa from me. So, obviously, just maybe, can you talk a little bit more about the refurbishment plans for this year?

So a couple of things I’m interested in. One, will there be any kind of drag effect from those stores being taken out of action on the like-for-likes?

So when you kind of strip it out of that, so any sort of thoughts around that? And then kind of maybe just sort of give us some sense as to what you feel the opportunity is from that sort of refurbishment process.

I know a couple of years ago, you were talking about some stores being kind of maxed out in terms of sort of sales potential. So just sort of scoping for us what you think the uplift could be on those stores?

And then as regards China - Costa China, I think back at the Investor Day, you sort of indicated that around 75% of the stores in China were what you’d kind of call at decent levels of kind of UK-type profitability. I just wondered if that sort of mix have shifted at all from that 75%?

Okay, great, and we’ve got Dominic here as well. So I’ll get him to chip in on a bit on our store and China position.

I think - hi, Julia, it’s Dominic.

It’s Tim.

[Multiple Speakers] just on the store reimage plan, so we’ve been trialing a new look and feel of the stores effectively. So think at Costa, you will recognize that a much better version of it with a brighter lighter environment and slightly wider product mix, and the early indications are really encouraging.

So we’re planning to do probably about 160 of the relatively light images this financial year. There is some drag for like-for-like from that, because they are closed for a period of time anywhere from a few days to weeks, depending on the level of the image.

But from the early tests, we feel encouraged on the longer-term sales building opportunity that a new store provides. And then next year, we will plan to do a more significant number of reimages.

And it’s one of the key pillars of the plan that we talked about at Capital Markets Day, 18 months or so ago. It’s one of the key pillars of the plan in reimaging, revitalizing and improving our store set, which I think will help us to, one, continue to grow profitably, but also continue to - for us to grow market share.

So we feel positive about our growth there. Just on your question on China.

Yes, numbers are still broadly similar. We’re doing a couple of things.

We’re closing the - some of the more unprofitable stores that were opened quite a few years ago, and that’s probably to be expected, there were something, for example, shopping mall which have turned to be not as successful as some of the other shopping malls, so we’re doing the right thing to close those stores. But we’re now opening an increasing number of new stores.

Again, we trialed a new store design and a new product in China, which is proving to be really successful. And we’re now rolling that out today, both in terms of new openings, but also reimages that we feel very comfortable with the level of sales return on those stores, but also the overall profitability.

And then just a couple of quick follow-ups. So just could you give us some sense as to how many more reimaging - reimaged stores you plan to do next year?

And then maybe just sort of back to sort of previous discussion about how businesses mature, how quickly are the stores in - the Costa stores in China maturing, please?

Yes. So the - I mean, we will do - we would expect to do over 260 reimaged stores in the UK next year.

And then in terms of maturity of the stores in China, we feel - we see sales maturity coming pretty quickly. So generally, between six and 12 months depending on the location.

The benefit we got in China is that, the market itself is growing very quickly as well in terms of coffee consumption, and there is somewhat less competition than there is in some of the more mature markets that we operate in, so we therefore see a slightly quicker maturation curve in those stores.

Anything else, Tim?

No, that’s perfect. No, that’s fantastic.

Thank you.

Okay, good. Thank you.

Yes, good morning. Two quick questions.

Hi, good morning.

Good morning. Hi, two questions on Costa.

First of all, the momentum in food sales, is food still in growth? And secondly, presumably, May was impacted by the very hot weather?

Yes, yes.

Yes, I mean, if you look at the trend - if you look at the retail trend actually, retail in April was actually quite a challenging month month overall in retail. As you may have thought so, it was slightly better, but it was hot weather and they offset each other overall as well.

And at Costa, if you look at what’s happening right now as you’ve got the kind of - you’ve got hot weather and you’ve got the World Cup going on as well.

Sure.

Food sales are still - food penetration is still increasing.

Yes, food capture rate is moving up. So we’re seeing good response to the new product.

As Alison said, particularly within breakfast and lunch, we’ve actually launched new afternoon sweet products as well and we are taking increased capture rates from that. So actually, we’re very encouraged by the food progress.

Okay. Thank you.

Okay, many thanks.

Good morning, Monique.

Good morning, everyone, and three questions for me, please. Firstly; on Premier Inn, could you comment just quickly on what are the drivers of the strong forward bookings you’re seeing at the moment?

Is that sort of domestic versus international business, leisure, or is it geographical, regional versus London?

Okay.

Second question…

Okay. We do them in turns.

Okay, sure.

Unless you want to speak those, you want to give us all three and then we’ll work out who’s answering what.

Just in Premier Inn, we are seeing the business-to-business bookings are being stronger, the consumer, that would be, we’re seeing the effect the consumers are under pressure, that means our Monday to Thursday is doing well and our kind of Friday to Saturday is a little bit weaker, and they were a little bit weaker overall. And that’s been helped by a kind of business booking tool that we put in, which is really kind of helping businesses kind of getting more sticky into our website overall.

So that’s been one of the case overall, and we’re seeing London being a bit better as well. I think I just mentioned that London, as we went through the comparatives got weaker as we got through the year as well.

So we are seeing kind of some pick up in London as well. A bit early, I think, kind of two or three weeks since the end of the quarter.

Yes. Okay, understood.

And then in terms of the Costa like-for-likes, could you give an update on sort of pricing strategy for the year? Do you think you will increase pricing or do you think pricing likely to be kept flat?

We’re unlikely to do much on pricing. I mean, we - it’s always the case, isn’t it?

We have the option available to us. We’ve not built into our plan, but we can - we do sometimes change our plans, however, to take price if we think it’s necessary.

But any guidance you’ve got all the way you’re thinking about like-for-likes at the moment continuing as they say, would not include a price increase.

We’re more focused on actually how to premiumize our coffee sales.

Yes.

So actually, how do we sell up and how do we sell more bundles, how do we get a food attachment laid out to increase the spend per head rather than just pushing price.

Okay, understood. And then finally, could you just give a quick update on the Costa Express machines, which I know is slightly down in the quarter.

I mean, obviously, you seem happy with your guidance of 1,300 machines worldwide. Yes, if you could just give an update on what’s happened in Canada?

Yes, okay. I mean, if you look at the net opens in the quarter, they were fairly flat.

And the reason for that is, we actually opened quite a lot actually in the UK, but actually came out of Canada, which is about 122 machines. So we’re still on plan.

Once we’ve done that now and we’ve now said at year-end that we’d come in expected year-end market, so we’re on track for the full year expectations overall. Sales overall is, we’re positive at plus 10, like-for-like is a little bit lower.

I mean, one of the things about Express is they’re weighted towards travel and where we had the kind of snow right at the beginning of March of course less people travel and then you had the hot weather as you got into kind of May. We do have a cold drink option as well, which benefit those as well, but actually overall 10% total growth we’re pleased with.

And then - sorry, Dominic, do you want to say how many kind of…

Yes, I was going to say. I mean, that Express business overall we’re seeing is, you get some ups and downs because of the weather.

But overall, it’s a really resilient kind of easy and successful business. And it’s really working for us in terms of an extra point that’s convenient to our customers, and that’s why it’s contributing to the overall Costa growth.

So we feel really positive about the momentum we got in that business. We also think there are real opportunities internationally.

China kind of in itself was not the best market for us to go into. The customer taste and price points in that market, it’s a really interesting trial and test to do.

We learned a lot from that trial and that’s actually forming up much better to which of the feature international markets that hold real potential for Costa Express.

And just to underscore that a bit, we probably wouldn’t have gone into China just - I’m sorry, that for sure, but we did it at Costa Canada and we see words getting confused this morning too early, apologies, Canada. We did that as a Shell partnership and Shell were really keen to test it in Canada.

We were probably less keen equally, however, and why would we do that? A, because they’re a great partner for us, and we think they have some great international opportunities.

They also wanted to test Malaysia, which we also did with them with more forebodings than Canada and Malaysia has been brilliant, and it’s got 200 machines and it’s doing practically well. So actually, these tests are a good thing to do in market, they won’t all work, but some of them do brilliantly well.

Yes, understood. Okay, thank you.

Hi, good morning.

I had a couple of things. Firstly, on Premier Inn.

We’ve already obliquely touched on it. The occupancy is being down a couple of points.

I think it’s one of the weakest for several years. Did you deliberately yield manage a bit less this quarter?

And how should we think about occupancy targets for the full-year, please?

Yes. So our occupancy in the quarter and like-for-like was down about 1.7%.

The market was down about 0.5% overall. You saw particularly, you saw our occupancy down in London just a little bit higher than that around about 2% and that was mainly because of the amount of capacity we put in the market overall and that’s about a 25% additional capacity put in the market.

In the regions, occupancy was down about 1.5%. So we did take the opportunity, actually, we do - we’re taking more assured bookings, so actually it was an area where we were able to take a little bit more weight in that market overall.

It’s more of an inflection, I think, it’s a softer market actually overall.

First of all it’s an inner bit capacity in London. And yes, we will be targeting some of that to come back.

Yes, presumably because of your forward bookings comment, occupancy, from here, you’d be more bullish?

We’re trying not to be bullish, yes.

Yes.

And Nicholas is staying a long way from bullish, but nonetheless forward bookings are more positive. I think that’s fair to say.

Is it Nicholas?

Yes.

Okay. And on a different topic and costs.

We obviously talked about this a lot at the full-year results. But are you still thinking around $70 million of savings this year mitigation, or are you thinking about trying to pull forward costs from the…

I think at this stage of the year, it’s fair to say we’re confident in our original £70 million. And so we’ve got that well laid down well-planned for.

And it’s certainly driving - it’s been very helpful in terms of us managing our year and delivering profit on expectations. And so I would just stick to our previous guidance.

Early days, but we’re pleased with it.

We’re pleased with where we got to.

Okay, that’s great. Thanks a lot.

Thank you.

Good morning, Rachel.

Good morning. And just two questions from me.

On Premier Inn, you said you’re gaining market share in regional UK. Could you give what your market share is at the moment in both regional and London?

And then, secondly, given the level of iso closures and CDAs and wider eating and drinking iso sector, has this created many opportunities for you in terms of more favorable sites and becoming available for store openings?

Nicholas, do you want to deal with the…

On property, generally, I’m not sure that I’d read straightforwardly from things happening on the High Street to us necessarily taking more space, because High Street is not the priority for us. It’s our drive-thrus where I think we’re keen in the first quarter, for example, in terms of drive-thrus.

So we’re really focusing on our high footfall. We’ve got plans on the High Street.

So what, generally speaking, we’re having conversations with landlords about our own rent positions. And we’re also having conversations about whether or not we’re going to commit to renewing leases if we don’t get more favorable terms earlier in the cycle.

So we’re certainly making some progress on our rent costs.

Yes, and just to echo what Alison said that one of the benefits of our model is, we - again, we have five-year leases or 10-year leases with five-year rent. So effectively, a 5-year lease compared to a lot of the other retailers that have 20 or 25-year leases, even some - many of the restaurants.

What that enables us to do is get into conversations with the landlord either on the point of renewal of the lease or even sometimes before that, which Whitbread and cost of covenants, obviously creates an opportunity for us to have a robust conversation with the landlord.

Thank you.

Great. Thanks.

Good morning, Anna.

Good morning. Thank you very much.

Sorry to return to an operational question on Costa. But you mentioned the new point-of-sale tills been rolled out at April.

I just wondered if you could just expand on what you found since then whether you’ve got higher capture rates of the busy peak times. So whether this is more of a cost-saving benefit coming through?

Yes. I mean, the till rollout itself, the core of it was, because we had to completely update an old method technology.

So it was one of those projects, which started as a - we have no choice, we need to change our tills, which is 15 years old, which if you have had an iPhone for the last decade, you’ll know that the tills were old and people didn’t think of an iPhone when they were put in. And so what it’s been doing is giving those functionality to then move forward with.

So the technology sells better, we’re reconfiguring it, so that it’s helpful to the team in terms of how they run the store. But then what we can do with it, there are things that we couldn’t previously do like Click & Collect, et cetera.

So we’ve got - now we got increased functionality to drive sales off back of the technology. But the technology was re-platformed in its entirety, because it was end-of-life.

So hopefully that sort of explains and we’ve got two-pronged attack on the back of it.

Yes. I just wonder whether it’s improved efficiency in terms of speed of pay, particularly, if you think about your loyalty cards or people paying on points if that has been integrated?

What we - sorry, Anna, it’s Dominic here. A couple of things I’ll say.

The first thing, it’s a really - it was a really big program to re-platform of all of our stores. If you think we got 1,400 exit stores, but our franchise partners also put the same till system in, so that’s over 2,000 point-of-sale have a new till systems.

And we did that in - we did a majority of that in quarter one. So that, that is a - that’s a lot of disruption to put into store network, Of course, you have to put one business tills, but also train all of our teams as well, which we did and it was a relatively seamless process, which I think was - operationally, was a real success for the team.

What we’re seeing in terms of the loyalty system, it’s a more reliable connection between the tills and the loyalty system. So that has definitely improved.

And as Alison said, the phase 2 of the till process will be continue to add functionality, which will improve the store experience. And it also enabled us to do things like Click & Collect, which we’ll be rolling out to more stores later this year and also, of course, enabled us to do the price bundles as well.

So operationally very successful so far. We’re seeing some improvement, but the key thing is it enables us to do more things for the business.

It will be better for our customers network, over time, it will be better sales.

Okay. Thank you very much.

Thank you.

Great. Thank you very much for your participation this morning for dialing in, and for the questions-and-answers.

And have a great day, everybody.

Thank you.

Thank you.