Shares in Whitbread were up over three per cent on the FTSE 100 and are a "strong buy" after the group reported a rise in group like for like sales of 7.6 per cent in the 13 weeks to 3 June, while total group sales were up 13.5 per cent.
The group said that like for like sales at its Premier Inn business were up 10.5 per cent while total sales increased 14.1 per cent.
Whitbread's Pub Restaurants saw like for like sales increase 3.6 per cent and total sales rise 4.2 per cent.
Whitbread Hotels and Restaurants like for like sales rose 7.4 per cent and total sales climbed 9.7 per cent.
Like for like sales at Whitbread's Costa coffee chain rose 8.5 per cent and total sales jumped 26.9 per cent.
Alan Parker, Chief Executive of Whitbread, said, "Whitbread has started the new financial year strongly, with continued momentum and good like for like sales. In the first quarter, total sales were up 13.5% and like for like sales were up 7.6%.
"Our outperformance was driven by increased marketing and the full implementation of dynamic pricing with improved value for money awareness.
"We are pleased with Costa's first acquisition of 89 Coffeeheaven stores in Central Europe and its integration is going according to plan.
"In these times of austerity, our strategy of value for money hospitality brands in growing segments of the market has put us in a position of relative strength. We intend to further increase our market share by improving occupancy in our hotels and customer volumes in our restaurants and coffee shops. Our longer term expansion will continue at a pace appropriate to our competitive performance and growth in the market. We will remain vigilant on cost control and are currently planning to be broadly cash flow neutral this year. Whitbread has performed well in recession and is strongly placed for any recovery."
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented, "This is an extremely impressive update and the share price has reacted accordingly in early trade.
"Sales across the board have been strong, most notably at the Premier Inn chain where a decline of 4% at the full year stage in April has transformed into a 10.5% increase in the first quarter. Meanwhile, the performance of its restaurants has posted robust growth, and progress at its Costa Coffee chain continues unabated, helped by its continuing international expansion. Whilst the outcome of the Budget could yet provide a drag on prospects, the company's value offerings have thus far proved very resilient.
"Indeed, over the last year the shares have shown an almost defensive quality, gaining some 78% against a wider FTSE100 gain of 25%. Quite apart from its expansionary policy, past cost cutting initiatives and debt reduction have contributed to the strength of the position in which the company finds itself. The current market consensus of the company as a strong buy may even be subject to further upgrades."
By 08:57 shares in Whitbread were up 3.59 per cent to 1,531.00 pence per share.