Whitbread chief can finally put the bitter moments behind him

Business Profile: David Thomas looks forward to retirement after guiding the leisure giant back into the FTSE 1

David Thomas loves Whitbread so much that he spends his weekends dragging his long-suffering wife around the group's "establishments", as he calls them. It might be a Brewers Fayre one week, a TGI Friday's the next. If Mrs Thomas is really lucky she might get a package tour featuring a meal at a Beefeater, a drink at a Costa Coffee then a quick swim at the local David Lloyd Leisure followed by an overnight stay at a Marriott Hotel.

Doesn't she ever say: "Stuff the Beefeater, let's go the The Ivy?" "Well, we go there too, if we can get in," he admits. "But I've been married to my wife for 34 years and she's got used to the fact that this is my life. She's actually a great fan."

After almost 20 years at Whitbread including the last six as chief executive, Mr Thomas, 59, finally looks like he is enjoying himself. The group climbed back into the FTSE 100 index last year and the City has started to say positive things about a company it used to hate.

It is a long way from the dark days of 1999 when Mr Thomas was comprehensively trounced by Hugh Osmond in the battle for Allied Domecq's pub estate. Whitbread had struck a cosy deal with Allied to buy its pubs, but didn't count on the intervention of Mr Osmond's Punch Taverns. The young Turk outbid Whitbread and rubbished the reputation of both the company and Mr Thomas in the process.

The urbane, immaculately groomed Whitbread man allows himself to feel a slight sense of schadenfreude that arch rival Six Continents has now suffered at Mr Osmond's hands. "The real irony is that Hugh would never have got the Allied Domecq pubs without the help of Bass [the previous name of Six Continents]. They coughed up £1bn to support the acquisition. I thought it was quite ironic that the biter was bit."

Mr Thomas can't resist twisting the knife. "Hugh's bid has gone away but I think it's quite likely that Mitchell & Butlers [the name for the pubs division which Six Continents is demerging] will be subjected to some pretty close examination by some other private equity houses. It's a classic play."

He admits that he "went to ground" after the Punch Taverns defeat, becoming one of the City's most reclusive chief executives. "I know people were saying 'what's the strategy of this company, they're just wallowing around,'" he says. "But it was absolutely clear to the board. And that's why I'm here [in the job] today. I had clearance from the board to sell the beer company within three months." The sale of the pubs operation soon followed.

Of course there are those that feel someone might have a pop at Whitbread, which is seen by some as a conglomerate whose disparate collection of leisure interests might look ripe for a break-up. "Well, no one's had a pop so far," Mr Thomas says with a smile. "If anything, the health of our organisation has moved from conference league to Premier League in the last two and a half years."

He then takes another pot-shot at his arch rival: "We've established a track record which is far superior to Six Continents and can show the potential of the business going forward."

What he might need to show a little more effectively is the synergies between Whitbread's interests which stretch across nine different brands. The first, he says, is consumer insight. "We spend a lot of time looking at what the consumer will want in five or 10 years time," Mr Thomas says. "All our brands benefit from that being done centrally." He is certain Whitbread will benefit from the growth of the so-called "third agers". These are 55-plus people, who are cash rich and time rich with the backing of inheritance money and final-salary pension schemes. "That's a great opportunity for us in terms of mid-week breaks in Marriott, day-time activities in David Lloyd and lunches at our pub restaurants."

Other benefits, he says are Whitbread's people, who are moved around the divisions. A third area is with locations where brands such as Travel Inn can be located on the same site as a Beefeater, or Costa Coffee branches put within Marriott Hotels.

Another issue which might feature in Whitbread's defence document, if a bid does come along, is the group's property portfolio. The company owns most its assets on a freehold basis and these are worth more than the whole company's stock market capitalisation. Some analysts feel Mr Thomas should release some of this value to fund expansion but he is reluctant. "We're probably going to be a little bit old fashioned on that," he says. "Our assets are in prime location and are unique. To sell these at the bottom of the market, well, it's just the wrong time."

He does not rule out such a course completely. "If an opportunity came along it wouldn't be an issue."

Some say this is evidence of Whitbread being like the civil service, slow and bureaucratic, and that Mr Thomas himself is rather wooden and formal. "I would totally reject that," he says of the first charge. "Every single one of our businesses is performance-managed. If you get green you're ahead of expectations. Amber, means you're ahead of last year, red means you're below expectations. If you're in the red area then you don't belong to Whitbread much longer."

The next candidate for the heave-ho could be Beefeater, seen as a leftover from the era of Blue Nun and tank-tops. Fifty of the 250 branches are being closed with a new format being tested. If that doesn't work, it will be sold.

Some new ideas are on the launch pad. One is Touch Base, a meeting room concept located next to some of the Travel Inn budget hotels. The plan is to open 15 with a view to a chain of 80 to 90.

But the big idea is to expand the brands the company already has. Over the next five years David Lloyd should go from 55 to nearly 100 branches, Costa Coffee from 300 to 600 and the number of Travel Inn rooms from 16,000 to 25,000. Mr Thomas sees lots of scope in the health sport and fitness areas and would like to add another restaurant brand.

Then there is overseas expansion. Mr Thomas foresees "hundreds" of Costa Coffees in Europe under a franchise system. There could be 20 David Lloyd clubs in southern Europe , he says, with a similar number of Travel Inns in Spain and Italy.

However, these will be his successor's opportunities as Mr Thomas will retire at the company's annual meeting in June next year.

What will he do? "I'll stay involved in business and get my golf handicap down [it is currently 23]." He might even get more time to see his beloved Manchester City play. "I lived closer to Maine Road [than Old Trafford]," he says explaining his allegiance. He will certainly spend more time indulging his passion for gardening where his interests are growing vegetables and cacti.

His next project, though, will be to ensure a smooth succession which he reveals is likely to be an internal candidate. "I certainly hope so," he says. But, in the post-Higgs era, he is unlikely to step up to the chairman's role. "I don't think that's a good idea," he reflects.

DAVID THOMAS - MAN OF LEISURE

Title: Chief executive of Whitbread.

Age: 59.

Pay: £627,000.

Education: Manchester University.

Career: Joined Whitbread in 1984 after spells at Finefare, Linfood and Grand Metropolitan. Joined Whitbread's main board in 1991 and became chief executive in 1997.

Interests: Manchester City, gardening, travel. Married with two grown-up children. To become a grandfather for the first time in April.