Whitbread pours £60m into coffee

Whitbread, the owner of the Costa chain, has expanded its coffee empire with the acquisition of Coffee Nation for £60m.

The UK leisure group secured the deal to move into self-service coffee bars. It will launch Costa Express across the country in locations including motorway service stations, hospitals, universities and airports.

Andy Harrison, chief executive of Whitbread, said the self-service market was "very attractive" and the deal would be the backbone of its plan to develop 3,000 Costa Express bars across the UK.

Mr Harrison said the company was outperforming rivals Starbucks and Caffè Nero "on almost every metric".

Yesterday, Whitbread released a trading update showing Costa's sales were up 7.9 per cent in the 50 weeks to 17 February compared with the previous period.

However, analysts said the slowdown in growth at the coffee chain "will be considered disappointing to the market". Following the statement the shares tumbled 5.1 per cent to close at 1644p.

Sales were also up at Premier Inn, rising 8.8 per cent over the same 50 week period.