SAGE, business response, drink sales, JDW, WTB, Sportech etc.:

A DAY IN THE LIFE:

We commented a couple of weeks ago about how infrequently we use (or receive) cheques these days.

And there are other victims of technology because, while Langton has a battered old Yorkshire Bank chequebook in its backpack that first saw action during the Crimean War and which last dispensed money in anger some time in 2018, it also has a cupboard shelf full of self-seal envelopes which have begun to curl and which couldn’t stick themselves shut now to save their lives.

Whilst we like the past as much as the next person, cheques and envelopes are victims of online banking and emails respectively and, whilst that’s a pity for whoever produces and processes the things, we wouldn’t want to turn the clock back.

And nor could we, of course. Anyway, it’s going to be a strange week but we’ll see it out to the end. On to the news:

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PUBS & RESTAURANTS:

The Covid backdrop.

Warnings from the scientists are becoming more pointed, the gist of it being that, because of the delays in getting sick, getting sicker, being admitted to hospital, then to the ICU and unfortunately then succumbing to the illness, the trends for the next fortnight to three weeks cannot be impacted by further restrictions but any tightening of restrictions could help from about three weeks’ time and onward. There is major pushback on the above from some politicians and from business.

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The Netherlands has become the first country in Europe to reintroduce a full lockdown. Schools will also shut from today alongside hospitality and non-essential shops. They will not reopen until at least 14 January. PM Mark Rutte said this was ‘unavoidable because of the fifth wave caused by the Omicron variant that is bearing down on us’.

Sage comments:

Documents seen by the BBC show that Sage has called for an “immediate” curtailment of indoor mixing to combat the spread of omicron. The Telegraph says ‘scientific advisers have told Number 10 that waiting until after Christmas to impose restrictions is not an option if the government wants to prevent the NHS being overwhelmed with more than 3,000 hospitalisations a day in January.’

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Business response:

CEO of Fuller’s Simon Emeny has criticised the government’s ‘mixed messaging’. The NTIA says it is being victimised once again. JDW says this is a lockdown by stealth. Young & Co’s Patrick Dardis says customers are “terribly confused” and many hospitality operators were already “hanging on by their fingernails”. He told the BBC ‘the latest fear campaign [is] damaging so many businesses that could have possibly survived, and as a consequence, thousands and thousands of businesses will now collapse in January.’

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The MA reports that UKHospitality expects pubs, bars, cafés, and restaurants to see a further 22% drop in bookings. This after they have already dropped by around a third due to increased Covid restrictions and government warnings to avoid hospitality venues. UKHospitality CEO Kate Nicholls said ‘Christmas trade is always crucial for the hospitality industry, making up as much as a quarter of the year’s profit for many businesses.’

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Labour analysis of data from the ONS suggests that one in every five businesses are at risk of going bust, with one in three reporting lower festive sales. Pressure is building on Chancellor Rishi Sunak to step in and provide some form of state aid.

Practical considerations:

There are a whole host of valid questions that need, somehow to be answered. We won’t try to list dozens but consider how can or should hospitality operators labour schedule? Should they sack staff or cut hours? What will happen to all the food they cannot sell? What is the position regarding landlords? If HMG is ‘monitoring’ the situation, when can we expect some sort of conclusion as to state aid (or definitive lack of it)?

Calls for government help:

The chancellor is back in the UK after meetings with US healthcare companies in California and is facing calls to help firms hit by the current “unofficial lockdown” resulting from the Government’s Covid-19 advice.

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Drink sales:

CGA’s latest Drinks Recovery Tracker has shown that average drinks sales by value in Britain’s managed pubs, bars and restaurants in the week to last Saturday (11 December) were 13% below the same week in 2019. Given that prices have risen markedly, footfall must be down by a considerably larger percentage amount. Beer & cider sales were down 15%, sales of wine were off by 21% and spirits did somewhat better at minus 6%.

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Drinks Ireland has collated data from across the world and says that global alcohol consumption was down by 6% last year.

Consumers:

As mentioned above, consumers may be confused as to current restrictions and as to the direction of travel. In addition, interest rates have risen and they will rise again in the New Year. Rail fares, as mentioned below, are set to rise by 3.8% from March, with the rise linked to the RPI measure of inflation in July.

The BBC reports that ‘UK shoppers chose to avoid High Streets and city centres on the crucial weekend just before Christmas’ quoting Springboard as saying that the number of people on High Streets fell by 5.9% on Sunday but rose 4.8% at retail parks week-on-week. In a normal year, there should have been a week-on-week increase.

COMPANY & OTHER NEWS:

JD Wetherspoon has this morning announced that ‘after consultation with shareholders and employees, it was felt that the company would benefit from having more pub experience at board level.’ It says ‘as a result, suitable applicants from within the company were invited to apply.’ It says over one hundred applications were received and says that ‘four appointments have been made – two as employee directors with full plc director status, and two as associate employee directors.’

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Chancellor Rishi Sunak is set to meet business leaders for crisis talks on Friday as firms warn of lost bookings. Mr Sunak said the government would do ‘whatever it takes’ to support jobs, but that funding was already available.

Hall & Woodhouse has acquired 10 pubs this year, with Mark James, Property Director at Hall & Woodhouse, saying ‘We are seeing some good opportunities at the moment, and our recent acquisitions add real quality, with many located in popular tourist locations across the south of England. These acquisitions will also significantly increase our bedroom stock.’ The company has a total estate of around 170 pubs.

Oakman Group Peter Borg Neal has written to customers and shareholders saying that the company faces ‘some immediate challenges with the new Omicron variant causing alarm in Government circles.’ He adds ‘we must keep a sense of perspective as the current situation is nowhere near as bad as last year’.

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Mintel comments on the evolving European plant-based food consumer profile saying that ‘COVID-19 has created new momentum for plant-based food and drink.’ It says ‘some consumers see the virus as a reason to reduce consumption of meat, poultry, dairy and other animal products.’ It says ‘this appeal is not expected to subside as COVID-19 becomes less of a factor on European lives.’

The BBC reports that Pret A Manger has received ‘thousands’ of complaints over its drinks subscription service as smoothies are often unavailable.

Falling consumer confidence and ‘Plan B’ restrictions have led to Shepherd Neame announcing a 10% rent deduction for its licensees from 1 January 2022. CEO  Jonathan Neame said ‘These remain challenging times, and we want to ensure we continue to offer every support possible to help our licensees preserve the future of their businesses.’

Online delivery company Farmdrop, which delivers food directly from farmers and producers, has closed. It follows recent warnings from food firms that the UK is facing a worsening supply chain crisis.

The joint venture between AEG and Crosstree Real Estate Partners, Waterfront Limited Partnership, is opening its biggest BOOM BATTLE BAR in the Entertainment District at The O2. BOOM BATTLE BAR will feature Axe Throwing, Augmented Reality Darts, Shuffleboard, as well as family-friendly favourites such as Crazier Golf and Karaoke Booths.

LEISURE TRAVEL & HOTELS:

Whitbread has noted the vote against its remuneration policy and provides an update saying that, because a ‘significant minority of shareholders (35.75%) voted against the advisory resolution to approve the Company’s remuneration report’, it has ‘engaged extensively with our large investors. As a result, we believe we have a good understanding of investor sentiment regarding the votes cast against. The feedback received has been relayed to the Remuneration Committee and will be taken into consideration by the Committee in its future decision making.’ WTB says ‘we will continue to engage constructively with investors on this topic throughout the rest of the year. A final update will be provided in the 2021/22 Remuneration Report.’

Germany has joined France in barring visitors from the UK from entering the country. Rules were in force from yesterday evening. TUI reports it has cancelled all river cruises in the country that had been due to depart this month.

Jacques Damas, CEO of Eurostar, has said that the banning of tourists from Great Britain is not helpful for his company. He says ‘the price is being paid by our customers. They are cancelling all their Christmas plans.’

Travel Weekly reports that two out of five UK adults are likely to book an overseas holiday in 2022, but 47% cited ‘changing UK travel restrictions’ as their greatest concern when considering an overseas holiday. 

Chancellor Rishi Sunak has faced criticism from travel agents and tour operators for only addressing concerns for the hospitality industry. Clive Wratten, CEO of the Business Travel Association, said ‘I am still awaiting your call to organise a conversation with the business travel sector. It is likely, by the way, that one of our members booked your trip to California! We need help as much as the hospitality sector, business travel puts £220 billion into [the] UK economy.’

Most Eurostar services were sold out over the weekend after a rise in bookings in response to the Covid restrictions announced by France on Thursday. There were also reports of long queues to board ferries at ports such as Dover. Things will be much quieter now.

Inghams and Esprit have cancelled departures to France up to and including January 4, with CEO of Inghams and Esprit parent Hotelplan UK, Joe Ponte, saying ‘For those customers impacted, we hope they will choose to join us for their holiday at a later date, but if not, they will be offered a refund.’

Rail fares are set to rise by 3.8% from March, with the rise linked to the RPI measure of inflation in July. Increases are normally implemented on the first working day of every year, but have been delayed until March since 2020.

OTHER LEISURE:

Sportech has announced that ‘further to the Company’s announcement on 1 December 2021 regarding Sportech’s exclusive discussions to potentially sell its terrestrial lottery supply contract, the period of exclusivity afforded to the potential buyer has been extended to 31 December 2021 in order to bring the negotiations and any resulting transaction to a conclusion.’ It adds ‘there can be no certainty that this transaction will proceed, and a further announcement will be made if and when appropriate.’

FINANCE & MARKETS:

The Institute of Economic Affairs has commented on the Bank of England’s decision to put interest rates up from 0.1% to 0.25% saying the Bank has ‘decided that continued inaction in the face of soaring inflation would do far more damage in the longer term than a small increase in UK interest rates now. This has been the judgement of the IEA’s Shadow Monetary Policy Committee for some time, too.’

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A Bloomberg columnist points out that, in one 24hr period last week, one major central bank put rates up (in the UK), another said it was doing nothing but would do something soon (the Fed), another said it wouldn’t raise interest rates now or during all of 2022 (the ECB) and a lesser bank (in Turkey) actually put rates down.

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Sterling weaker at $1.3221 and €1.1747. Oil price sharply lower at $70.95. UK 10yr gilt yield up 2bps at 0.77%. World markets: London up on Friday but the rest of the world headed south. Far East considerably lower this morning & London set to open down by around 118pts as at 7am.

RETAIL WITH NICK BUBB:

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