Shares in Costa-owner Whitbread (LON:WTB) rose as much as 7 percent on Monday, after US hedge fund became the largest shareholder of the group.
Elliot Advisors now holds a 6 percent stake in Whitbread, adding to pressure to break up its businesses.
Whitbread owns both the Costa and Premier Inn brands, however, Elliot Advisors have argued that both businesses are distinct enough to separate.
This follows calls from another investor, Sachem Head, who holds a 3.4. percent stake, for the the company to consider dividing the business, alongside a sale and leaseback of its Premier Inn hotel properties.
Earlier this year, Whitbread announced that former ITV boss Adam Crozier as its new chairman, replacing Richard Baker, prompting suggestions of a impending shake-up of the business.
Whitbread chief executive Alison Brittain also indicated in comments earlier this year that the company may be open to considering restructuring:
“We remain entirely open-minded about the structure of the business and are fully committed to reviewing it on a regular basis at the board level.” She said back in January.
The company trading update in January indicated that sales performance continue to be strong across the group.
Whitbread reported a total sales growth of 6.8 percent in the year to date, and confirmed it was on track to meet full year expectations.
Nevertheless, it warned of a “tough” year ahead, with the UK high street continuing to come under pressure.
Whilst Costa delivered strong results with a total sales growth of 7.2 percent, its like-for-like sales figure fell 1.5 percent in the 13 weeks to 30th November, prompting concern from investors.
Household spending levels have dropped to their lowest level since 2012, according to the latest UK Consumer Spending Index.
Whilst the drop in sales was affected by temporary adverse weather conditions, the high inflation levels pushing down consumer confidence signal more long-term challenges ahead for retail.
Shares in the group are currently up 6.96 per cent as of 12.05PM (GMT).