Whitbread’s biggest shareholder is demanding a seat on the board of the Premier Inn owner after voicing “growing concern” with the firm’s turnaround plans.

The FTSE 100 hospitality giant said in April it would slash thousands of jobs and sell off all of its restaurants in a bid to keep up with rising taxes and the extra costs caused by the Iran war. 

Corvex Asset Management, which owns more than six per cent of Whitbread, had initially called for a sale of the firm but on Tuesday said it is now seeking a “rigorous, fact-based review” of the company. 

The investor has urged Whitbread to hand a board seat to James Gemmel, who has been a partner at the firm for 15 years, to help “establish a pathway that maximises value for all”. 

In a letter to the hospitality firm, Corvex managing partner Keith Meister cited his “growing concern with the company’s strategic direction, continued commitment to the status quo, and, in particular, the structural complexity of the business and its approach to capital allocation”. 

“The company’s limited willingness to meaningfully engage has ultimately left us with little choice but to take the action we are announcing today,” he added. Whitbread disputes Corvex’s claim that it has not met with the hedge fund, it is understood.

Corvex backtracks on calls for sale

Meister said Corvex is seeking a seat on Whitbread’s board with “no predetermined agenda – only a commitment to maximising risk-adjusted value for all shareholders”. 

“We want to work with the board in a collegiate and non-adversarial way, as one member among many, bringing a direct shareholder perspective to these decisions,” he said. 

The hedge fund pointed to Gemmel’s previous turnaround efforts at online gambling firm Kindred Group and American utility company MDU Resources as proof that he would work “constructively” with Whitbread’s board.

Corvex’s dispute with the Premier Inn owner centres on the hospitality firm’s new five year plan, which has seen the group crack down on costs to protect itself from the “unexpected” impact of rising business rates. 

Whitbread’s new plan will also see it cut capital spending by £1bn, in the hopes of having £2bn of cash flow available for shareholders by 2031.

The group said it will offload about 100 restaurants, cut about 3,800 jobs and seek about £1.5bn by selling off the freehold rights to its hotels. 

Corvex’s latest move marks a significant shift in approach. The investor had initially called for the FTSE 100 firm to put itself up for sale, scathing the group for its “chronic misallocation of capital”. 

Whitbread’s shares jumped by one per cent on Tuesday morning, to 2,351p.

A spokesperson for Whitbread said: “Whitbread continues to make strong progress with its Five-Year Plan to deliver improved margins and returns which will generate an additional £2bn for shareholders by 2031.

“Following our comprehensive strategy review earlier this year, we are working at pace to build on the unrivalled strength of the Premier Inn brand, with all our branded restaurants in the process of being either sold or converted to additional rooms, as we continue to focus on maximising shareholder returns. We continue to engage with all our shareholders and look forward to providing a further update on progress at our interim results on 15 October.”