July Tracker, Just Eat Takeaway, Fulham Shore, supply & demand etc.:

A DAY IN THE LIFE:

Over 700 out of office replies yesterday, which tells you something.

Namely that it’s August and that most people have enough sense not to be at their desks when the temperature is soaring into the high teens, the clouds are above a couple of thousand feet and the UK drizzle is at its least noticeable.

But, fear not, though there is relatively little to say, Langton is here. on to the news:

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CGA TRACKER – JULY UPDATE:

Overall:

• The July revenue Tracker produced by CGA has reported that total (not LfL) pub & restaurant sales were down by 6% on the same month last year. The Tracker reports that restaurants outperformed pubs and bars enjoyed a ‘freedom day’ boost.

• The Tracker says that sales struggled in London but held firm outside the M25. It says that rolling 12mth sales to end July were down 20%

• Further comment: See premium email

PUBS & RESTAURANTS:

Demand:

• Would be customers ‘demand’ hospitality services. But they also need to have the means to spend. The LSE has produced work suggesting that a million workers are employed by businesses at risk of closure over the next three months. The university’s Programme on Innovation and Diffusion finds that one in 16 firms fall into this category. There are also some concerns that the £20 per week cut in Universal Credit could also impact spending. See below for observers’ comments suggesting that ‘most’ companies were not responding to current labour shortages by putting wages up.

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Supply:

• This is broadly the capacity of the industry to supply services. It is driven by reopening numbers and, drilling down a bit, by the number of shifts worked and trading periods covered. To ‘supply’ hospitality services, the industry needs to be allowed to open but also requires product and staff. Whilst the first is a tick, the latter two are somewhat problematic.

• Re goods, the shortage of drivers is a problem. See KFC comments yesterday. Responding to reports of forthcoming beer shortages from the global brewers due to planned industrial action, James Calder, Chief Executive of the Society of Independent Brewers says ‘amid fears of taps running dry, pubs, bars and restaurants should look beyond mass-produced beers from the Globals and speak to their local independent breweries. Being local they have the flexibility to brew and get beer directly into venues up and down the UK.’ Whilst an agreeable sentiment, SIBA, of course, has a dog in that fight.

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• The SLTA has said that lorry driver shortages are leading to delays and cancellations of beer orders across the industry north of the border. It says ‘the full re-opening of the hospitality sector has been hit with two serious issues – a shortage of staff availability and the more recent immediate problems facing the supply chain.’ The SLTA says its ‘members are already reporting delays and cancellations of orders placed with brewers and other supply chain operators and in some instances beer orders that have been delivered fall far short by around 75%.’ This will impact supply and capacity. It says ‘in many cases, packaged goods are not being delivered and we have reports of pub and bar owners travelling the length of the country to source supplies.’

• Supply shortages could lead to price increases. The Evening Standard yesterday covered a number of restaurants and concluded that a combination of labour shortages and difficulties in sourcing product could lead to price increases. The Daily Mail reports Itsu as saying that wages may be increased by as much as £5 per hour.

• Re labour, the Chartered Institute of Personnel and Development says that only 23% of companies contacted said they were going to raise wages to attract staff. This seems a little low. 

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• Pinging rules changed yesterday such that double-jabbed individuals no longer have to self-isolate if pinged. The MA says this will ‘alleviate some pressure’ on hospitality businesses. UKH says that around 60% of hospitality businesses have suffered staff outages as a result of the recent pingdemic. It says that 267,000 people (around 13% of the industry’s workforce) have been or are self-isolating. The NTIA says 78% of night-time operators have lost staff and the BBPA says that 1,000 or more pubs may have had to close temporarily as a result of staff shortages.

Other news:

• When considering the potential for sustained VAT reductions, business rates suspensions etc, it’s worth remembering that the Treasury is not awash with cash. Indeed the reverse is true. Green economy commitments, the cost of Covid and PM Boris Johnson’s ‘levelling up’ promises will likely cost hundreds of billions of pounds. Indeed, Covid has already done so. The Centre for Cities says that levelling up could cost as much as German reunification at around £2,000 billion.

• Pragma Consulting reports on veganism and says that it appears to be setting in. it says ‘veganism has been growing in the UK for many years and 2% of the UK population now practice this way of living (1.36m people), a rise from 0.25% in 2014.’ It adds ‘a growing number of non-vegans have also started supporting vegan products, with an estimated 92% of plant-based meals consumed in 2018 eaten by non-vegans.’ As many as 31% of UK adults plan to eat more meat-free products this year compared to last.

• The MA reports Pernod Ricard UK MD David Haworth as saying that the domestic on-trade has adapted in the face of the Covid-19 pandemic. Haworth says ‘the UK is much more concentrated [than a number of continental countries], as you would expect.’

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• ASDA and National Express are offering rewards to younger staff who get a COVID jab.

• See St Austell’s comments on Staycations under Hotels & Leisure Travel below.

Company news:

Just Eat Takeaway:

• Just Eat Takeaway.com has reported H1 numbers saying that ‘our consumer base, restaurant selection and order frequency have strongly increased, which will lead to improved profitability going forward.’ The company says that ‘revenue on a combined basis grew by 52% to €2.6 billion in the first six months of 2021, compared with €1.8 billion in the first half of 2020, on a constant currency basis.’

• The group says that ‘adjusted EBITDA on a combined basis for Just Eat Takeaway.com was minus €190 million in the first six months of 2021, representing an adjusted EBITDA margin of minus 1.3% of GTV, reflecting the significant investment efforts of the Company.’ It says it has ‘invested predominantly in the historically underinvested legacy Just Eat markets.’ Revenue in the UK has risen from €303m to €552m but profitability has fallen from a EBITDA of €127m to a loss of €71m. Total revenue is up from €1.78bn to €2.61bn. UK order numbers increased by 76% from 76.8m to 135.0m. The company points out that ‘the Just Eat business was consolidated from 15 April 2020. These figures [mentioned above] are presented as if the combination was completed on 1 January 2020 to provide comparable information for the full six months period.’

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The Fulham Shore:

• The Fulham Shore plc has reported full year numbers to 28 March saying that revenue decreased 41.3% to £40.3m (2020: £68.6m), driven by trading restrictions implemented by the UK Government due to the COVID-19 pandemic, which were in place throughout most of the financial year.’ It adds that it saw ‘buoyant trading during the summer of 2020 when restaurants were able to operate across eat-in and outside dining’ and says that it generated adjusted EBITDA of £1.6m excluding IFRS 16 (2020: £7.2m).

• FUL reports a headline operating loss of £2.2m versus a 2020 profit of £4.4m. The loss before tax (after interest and property impairments) is £7.5m versus £0.8m in 2020. Debt at 28 March 2021 was £3.6m versus £9.5m in 2020. The group opened two new Franco Manca pizzeria and one new The Real Greek restaurant during the year. As of this month, the group has 74 restaurants and all are fully open. The estate comprises 55 Franco Manca pizzeria and 19 The Real Greek sites.

• Chairman David Page says ‘during an unprecedented year, we are pleased to have navigated through the very challenging trading conditions to deliver this good performance.’ He adds ‘since the beginning of the current financial year commencing 29 March 2021, The Group has continued to trade profitably and ahead of management expectations, driven by strong performances across our suburban restaurants.’ Re the future, Mr Page says ‘in line with our long-term expansion strategy we have developed a strong pipeline of new locations, supported by favourable rental terms and the Group’s strong cash position. We plan to open 10 locations during the current financial year and have identified more than 150 additional sites in line with our medium-term plans.’

• FUL concludes ‘having navigated the impact of the Covid-19 pandemic, the Group is well-positioned to capitalise on emerging opportunities. We are confident that this current financial year will be the start of another exciting period of growth for The Fulham Shore.’

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HOTELS & LEISURE TRAVEL NEWS:

• Research by BVA BDRC has suggested that 1.2% of UK adults booked an overseas holiday last month. Whilst low, this is double the rate seen in May and June. It has been put down to the removal or lightening of travel restrictions. The number of adults booking a domestic holiday fell in July to 3.4%. Whilst down, this is markedly higher than the overseas numbers.

• In line with the above, Cornwall-based brewery St Austell has suggested that elevated staycation numbers will persist into the autumn. St Austell has said that a number of its most popular properties featuring accommodation are almost fully booked to the end of December.

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• Business Travel Association CEO Clive Wratten has said that the price cut for NHS Covid tests for travellers ‘is a token small step forward.’ He says ‘these tests remain prohibitively expensive in comparison to other countries and the private sector is unregulated.’ Wratten adds ‘UK travellers are currently facing unacceptable demands in order to travel safely, despite our effective vaccine programme.’

• TUI numbers. Digging further into TUI’s H1 numbers, Travel Weekly says that the number of holiday cancellations in the UK in recent weeks has been greater than the number of new sales. CEO Fritz Joussen says ‘we’ve not been adding bookings in the UK, we’ve been losing bookings.” He says that, whilst the vaccine rollout has been fast, ‘the politics on international travel were different.  Portugal was on the green list, then it was off.’ He says ‘customers didn’t know what to do.’

• Adventure holiday specialist Travel the Unknown has ceased trading.

• Administrators are reported to have been appointed to the Glenburn hotel in Rothesay on the Isle of Bute.

• American Express Global Business Travel reports that 98% of clients believe that business travel will return before the end of this year.

OTHER LEISURE:

• Changing regulations threaten the business models of ticket re-sellers.

FINANCE & MARKETS:

• Levelling up. The Centre for Cities says this may cost a similar amount to that spent by Germany when it raised living standards in the East. Expenditure amounted to some £2,000bn. As there is a large amount of wiggle-room as to what ‘levelling up’ actually means, it is likely that the sum spent will be markedly less than the figure mentioned above.

• Sterling a shade weaker at $1.382 and €1.174. Oil price a touch lower at $69.55. UK 10yr gilt yield down 1bp at 0.57%. Markets lower yesterday & London set to open down around 28pts.

RETAIL WITH NICK BUBB:

• Nick is on a well-earned break. Back after the Bank Holiday.

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 17 Aug 21 Fulham Shore FY results

• 18 Aug 21 Carlsberg H1 numbers

• 19 Aug 21 Rank FY numbers

• 1 Sept 21 PPHE H1 numbers

• 2 Sept 21 Jet2 AGM

• 15 Sept 21 Restaurant Group H1 numbers

• 21 Sept 21 Compass Group full year update

• 22 Sept 21 Ten Entertainment H1 numbers

• 23 Sept 21 Playtech H1 numbers

• 1 Oct 21 JW Wetherspoon

• 5 Oct 21 Gregg’s Q3 update

• 13 Oct 21 Marston’s FY trading update

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 23 Nov 21 Compass Group FY numbers

• 24 Nov 21 Britvic FY numbers

• 30 Nov 21 Marston’s FY numbers

• 8 Dec 21 TUI FY numbers

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