Current trading; who are the winners & losers?

September 22 2016

Background – costs:

There is little inflation but 0% LfL won’t be enough to hold margin
Because what inflation there is, is the ‘wrong sort’
Utilities are OK but wages (esp. National Living Wage) are a problem
Occupancy costs & F&B costs are benign – but the latter will rise as Sterling falls

Outlook for margins:

Don’t worry, say some Brexit supporters, inflation won’t resurface, margin will take the strain
To operators, this is more of a problem than a solution
Passing on price rises has been tough – but there could be a concerted push in this direction
In the absence of price rises, LfL growth will be necessary

Late summer trading:

Weather was good – here
But overall trading was sluggish – here – August was +0.6%
We’ve since heard Shepherd Neame is doing 8.2%
M&B has chipped in with 1.8% (incl. 3.7% for drink)

So who, then are the losers?

It’s worth saying the Coffer Peach Tracker didn’t include the August Bank Holiday
This was very good meaning PLC updates could in aggregate exceed the ‘average’
Wet sales were good, London was good
Retailers maintain the High Street was reasonable but retail parks were not
Casual diners look as though they are lining up amongst the losers
Ed’s (per Sky) is looking for cash and others with tired brands may also be struggling

Money, mouth etc.

Pubs are currently > casual diners & there’s less of an over-supply problem with the former
New entrants have more energy etc. than incumbents
Established, non-vibrant casual diners are in the wrong quadrant
If they are over-represented on retail parks, then that won’t help, either