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Tuesday, 30 October, 2001, 10:51 GMT
Whitbread lines up Cafe Rouge sale
Whitbread chairman Sir John Banham
Banham: 'Cafe Rouge is a good business'
UK leisure group Whitbread has said it has received bid approaches for the Pelican restaurant group, which includes the Cafe Rouge chain.

We cannot see it (Cafe Rouge) getting to the size it needs to be to justify its place in our portfolio

Sir John Banham, Whitbread chairman
Announcing a 25% drop in first-half profits, Whitbread said a sale of the 152 outlets was likely "within the next six months".

Whitbread chairman Sir John Banham told the BBC it had decided to hang a "for sale" sign over the Pelican group because it was not growing fast enough.

The company also announced it was cutting 300 jobs from its Marriott Hotels group, which has seen a 25% drop in sales since the 11 September terror attacks in the United States.

The former brewer, which also runs David Lloyd fitness clubs and Pizza Hut restaurants in the UK, said its first-half pre-tax profits before exceptional items were 135.7m, compared with 181.9m in the same period last year.

'Prudent move'

However, the company said the figures were skewed by the 1.62bn sale of its pubs and bars division earlier this year.

Like-for-like sales were actually up 4.2% for the six months to September, it added.

Whitbread confirmed on Tuesday it was intending to sell the Pelican group, which includes the Cafe Rouge, Bella Pasta, Abbaye and Mama Amalfi chains.

The company claims the Pelican group has net assets of 50m.

The four brands will be split off into a separate management structure while a buyer is found.

Chief executive David Thomas said: "The ideal situation is that we will sell them all together. That is our starting point."

He said Whitbread planned to put 150m of capital expenditure, including two hotel projects, on hold for two months, in the light of world events.

"Given the lack of clarity in the future, we have taken a prudent approach which will allow us to be flexible," Mr Thomas added.

'Good business'

However, the group said it planned to spend up to 300m on its other businesses, primarily the David Lloyd leisure clubs.

Meanwhile, chairman Sir John Banham defended Whitbread's decision to sell the Pelican group, which it acquired in 1996 for 133.1m.

"The reality is that Cafe Rouge is a very good business.

"We have been disappointed by our ability to grow it fast enough.

"We cannot see it getting to the size it needs to be to justify its place in our portfolio," Sir John told BBC Breakfast.

He said Whitbread wanted to see 10m operating profit from each of it main units, "and we could not see Cafe Rouge getting that".

In the City, Whitbread shares were down 2.5p at 515p in mid-morning trade.

See also:

30 Oct 01 | Business
Whitbread's Rouge awakening
18 Sep 01 | Business
Interbrew ordered to sell Carling
20 Mar 01 | Business
Whitbread to sell pubs for 1.6bn
11 Mar 01 | Business
1.4bn battle for Whitbread pubs
31 Oct 00 | Business
Cafe Rouge faces cull
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