Whitbread, the owner of Premier Inn, is to close underperforming restaurants and convert them into hotel rooms with the loss of 1,500 jobs.

As part of this plan, the FTSE 100 company intends to convert 112 sites with lower returns into new hotel accommodations and divest 126 others, ultimately adding 3,500 rooms over the next five years.

Already, Whitbread has finalised the sale of 21 of these restaurants for £28 million. Dominic Paul, the current chief executive succeeding Alison Brittain, highlighted the company’s robust balance sheet and investment strategy, enabling it to capitalise on the substantial growth opportunity presented by the UK’s evolving hotel landscape.

Acknowledging the short-term impact on profit performance this year, Paul expressed confidence in the uplift anticipated from the 2027 financial year onwards, with subsequent increases in margins and returns as the new extensions are rolled out.

Established by Samuel Whitbread as a brewery in 1742, Whitbread divested its beer business in 1999. Today, the conglomerate operates 840 hotels with 83,500 rooms in Britain and 10,000 in Germany.

The growth initiative was disclosed alongside Whitbread’s full-year results, revealing a 21% surge in pre-tax profits to £452 million, driven by a 13% revenue increase to £2.96 billion, buoyed by UK expansion and continued progress in Germany. Whitbread has announced a final dividend of £115 million, up 26% from the previous year to 62.9p per share, and plans to repurchase shares worth £150 million.

Although total sales for the seven weeks ending April 18 were marginally lower, primarily attributed to public holidays, management anticipates a positive upswing in demand across both business and leisure segments in the coming weeks, supported by the company’s forward booked revenue position.