Whitbread is laying the groundwork for a sale of part of its £700m pub and restaurant arm in a move that could place its Beefeater steakhouse chain on the chopping block.
The FTSE 100 hospitality giant is understood to have hired advisers to explore options for the division, which also houses the Brewers Fayre pub chain, amid concerns that poor food and drink sales are weighing on the wider business.
The move marks the latest chapter in the sell-off of the one-time brewer as bosses focus on repeating the UK success of its flagship hotel chain Premier Inn, in Germany.
Sources said that discussions are at a preliminary stage and may not result in the business being offloaded. They insisted that only a "small part" of Whitbread’s food and drink operations was under consideration.
It follows a warning in Whitbread’s recently published annual report of “the increasing divergence of performance of the hotel business and the food and beverage business”.
This could have a detrimental effect on the premium charged by Premier Inn for rooms compared with its rivals, Whitbread said.
Whitbread’s accommodation group sales grew by 27pc in the year to March compared with a year earlier, while food and beverage sales by 4pc.
“The expected bounce back following the removal of trading restrictions last year has not materialised fully,” the company said in its annual report.
Beefeater is the oldest brand owned by the FTSE 100 company after being set up by the then Whitbread Brewery almost half a century ago. It is one of Whitbread’s two biggest food and beverage businesses alongside 161-site pub chain Brewers Fayre.
Whitbread’s advisers are understood to have begun contacting potentially interested parties, asking them to sign non-disclosure agreements ahead of a formal sales process.
Many of Whitbread’s pubs and restaurants operate under a “co-lo” arrangement next to or part of Premier Inn hotels, often serving breakfast on behalf of its sister company.
Bankers are understood to have championed the chain’s freehold properties against which bank financing could be secured.
The sales process is at an early stage and Whitbread’s advisers have not guided parties on the valuation of the business, sources said.
Whitbread does not break down the financial performance of its individual restaurants. UK and Ireland food and beverage annual sales were £712.7m.
The decision to offload the business is the first major move since Whitbread sold Costa Coffee to Coca-Cola for £3.9bn in 2018.
Whitbread’s history can be traced back to 1742 when Samuel Whitbread went into partnership with Godfrey and Thomas Shewell.
Whitbread remained a brewer until 1974 when its first Beefeater Steakhouse was opened. In 1987 the company ventured into hotels with Travel Inn, which would eventually become Premier Inn.
Whitbread declined to comment.