LONDON BRIEFING:WHEN THE finance director of a FTSE 100 company quits his powerful central post to run one of the divisional operations, there's almost certainly something brewing.
The company in question is Whitbread, where Chris Rogers is taking over as managing director of its Costa Coffee subsidiary after seven years as group finance director. Experienced finance directors tend to see the chief executive’s chair as their natural career progression, although they often have to jump ship to achieve their ambition.
So Rogers’s switch to run a single division of the Premier Inn hotels to Beefeater and Brewers Fayre pub restaurants group – even one as successful as Costa Coffee – is an unusual one and it swiftly sparked speculation that Whitbread is gearing up to spin off the coffee shops chain.
The Whitbread chief executive Andy Harrison was playing down the demerger speculation yesterday although he didn’t rule it out completely: “We have always said ‘never say never’,” he told reporters. The group is, instead, focused on “delivering Costa’s growth story” which he says will create “substantial” value for Whitbread shareholders.
So too would hiving off the Costa business, which has enjoyed stellar growth in recent years. It has getting on for 1,400 shops in the UK and 800 overseas, including 120 in China. Over the next five years, it sees the chain expanding to 3,500 outlets worldwide, producing sales of £1.3 billion. That’s not bad going for a business that started in 1971 as a small cafe in Lambeth, London, opened by brothers Sergio and Bruno Costa.
Now it’s overtaken Starbucks as Britain’s largest coffee shop brand and, despite sometimes being called “Costa Packet”, seems immune to consumer cutbacks.
It’s not alone – as news of Costa’s new boss was announced yesterday, rival Pret à Manger revealed its own expansion plans on the back of another recession-defying performance that saw sales jump by 15 per cent last year, to £377 million, and profits by 14 per cent to £52.4 million.
The Pret à Manger chain, which has 286 outlets, plans to open 24 new shops in the UK and another 20 overseas, including another two in Paris, where it opened up last year. Its expansion will create 550 new jobs in the UK, a proportion of which will be earmarked for school leavers and as apprenticeships for the homeless. In total, it will offer 70 apprenticeships this year.
Back at Costa, Rogers takes over from long-serving Whitbread man John Derkach, who is leaving to become chief executive of Tragus, the private-equity owned business behind the Café Rouge and Strada restaurant chains. Whitbread’s Harrison was warm in his praise yesterday for Derkach, who more than quadrupled the Costa business during his six years in charge.
That’s a hard act for the new boss to follow. And, despite playing down expectations that Costa will be hived off, Whitbread knows the bigger and more profitable the coffee chain gets, the more sense it makes to be independent. In the meantime, as long as consumers are prepared to splash out on cappuccinos, mochas and lattes, it’s a very useful earner for Whitbread.
*****
IF ANGELA Knight wasn’t superstitious before the financial crisis erupted five years ago, she almost certainly is now.
It was on April Fool’s Day in 2007 that Knight, a former Conservative MP and economic secretary to Kenneth Clarke, took over as chief executive of the British Bankers’ Association.
Within six months, she faced the first run on a British bank in more than a century, as worried savers besieged Northern Rock to withdraw their savings.
As Knight announced on Monday that she is to quit her role as the public face of the banking industry in the summer, she recalled that day – and the 19 back- to-back television and radio interviews she conducted as savers queued round the block outside Northern Rock.
As the crisis unfolded – and the recriminations began – Knight became a familiar face as she spoke up for the banks and bankers against mounting public anger. Although thought by some to have been too combative and a little too “Thatcherite”, Knight won widespread respect for the energy with which she took on the task of defending the indefensible.
After her tumultuous five-year stint at the BBA, Knight says she has “one more job in me” and that she is now going to look for it. In the meantime, anyone with a thick skin and plenty of energy should get their application off to the BBA without delay.
Fiona Walsh writes for the Guardian newspaper in London
