Brewer puts Keg sale on the menu

Whitbread is to sell its restaurant operations in North America to concentrate on expansion in Britain and Europe. According to a drinks analyst, the company is close to hoisting the for sale sign over the 81 Keg restaurants in Canada and North-west America.

The decision to sell the chain, instead of keeping it and expanding it aggressively through new site openings, is understood to have been taken early this week. The company, which declined to comment, bought the Keg chain in 1987 and revamped the business in 1994 - principally involving changing the menu to lessen the dependence on steak meals.

The analyst said the disposal would be a logical step for Whitbread to take, and now was a good a time as any to sell the Keg business. Keg restaurants were, he said, starting to trade profitably and franchisees were slowly being signed up to open new sites "and there is potential for growth".

Most of the Keg restaurants are managed, although two of the three openings in the last year are franchised operations. Whitbread has been expected to dispose of these operations following the sale last year of the Keg restaurants in Australia.

Whitbread has expanded rapidly in the past few years in branded restaurants in the UK, and has recently accelerated the growth programme by buying the Pelican, Dome and Costa Coffee chains.

The company has moved steadily away from its brewing roots, and its food sales in the UK are second only to McDonald's. Whitbread owns the UK franchise for Pizza Hut, and also operates TGI Friday's and Brewers Fayre and Beefeater pub restaurants.

Whitbread has plans to increase the number of its pub restaurants from the current 558 to 800 by 2001. The 262 other restaurants operated are set to be expanded to 750 over the same period.

The push into Europe is through the Churrasco Maredo steak restaurants. This chain produced most of Whitbread's international profits last year of pounds 5m, less than 2 per cent of the total pre-tax earnings of pounds 286m.