Whitbread said sales growth slowed and margins declined at its Costa Coffee chain, overshadowing a better than expected first-half profit and sending the hotel operator's shares lower.
Whitbread's Costa Coffee is facing tough competition as customers move to independent coffee shops offering newer blends.
Like-for-like sales growth at its Costa Coffee business slowed to 2% in the 13 weeks to September 1, from 2.6% it reported in June, while margins fell 1.8 percentage points from a year earlier.
The sluggish growth comes after Whitbread said in June that Costa Coffee had recovered from a poor performance earlier in the year.
The coffee chain accounted for 36.6% of the company's first half revenue.
Former banker Alison Brittain, who took over as Whitbread's chief executive in September last year, faces a tough task of keeping costs tight and expanding overseas.
Whitbread's hotel business is also facings rising competition from online holiday rental startups such as Airbnb.
The company said today that its underlying pretax profit rose to £307m in the six months to September 1, from £291.3m a year earlier.
This was ahead of a £303m forecast in a company-compiled consensus.