Langton Capital – 2015-09-02 – UK market growth, evolution, Uber, markets & other:
A Day in the Life:Follow us on Twitter at either @langtoncapital or @brumbymark. Langton is not in the office this week but should be able to keep the email going before things get back to normal next week. The Day in the Life might be somewhat sporadic and there will be no Daily Wrap. The News:Pub, Restaurant & Drinks Producer News: • BrewDog has released its mini-bond on CrowdCube to be paid back over four years with 6.5% interest and other perks. The group intends to use the resulting money alongside its ‘Equity for Punks’ share scheme to build a bigger brewery in the UK, continue its UK bar openings, grow its beer range and expand its international bar division (among other things). • Technomic reports 100 largest UK restaurant chains managed 6% increase in sales in 2014 v 6.4% in prior year. Technomic says ‘leading chains continue to expand at a fast pace, providing strong sales performance and creating a more competitive environment.’ It says, however, that ‘utimately, smaller, regional chain growth provide more options to consumers and greater access to broader tastes.’ Technomic reporst that ‘limited-service restaurants among the Top 100 saw a sales revenue increase of 5.9 percent’ whilst full-service restaurants ‘also experienced a healthy growth year in 2014 with an increase of 6.1 percent in sales.’ It says ‘the bar and grill cluster lead the way in percentage growth (13.5 percent), followed by Asian (10.6 percent), and French (9.4 percent).’ • Technomic reports Costa sales increase in 2014 v 2013 was +£161m, largest across UK restaurant chains. Followed by Wetherspoon (£109 million), and Domino’s (£84million). It says ‘similarly, the brands that grew the most in units were Costa (176 units), Subway (155 units), and Domino’s (40 units).’ Technomic adds ‘on-the-go meals appeal to hurried customers’ and says ‘ethnic flavours make an impression: operators who keep menus fresh with the addition of global flavours can attract and retain customers.’ • M+C reports Pizza Express is set to trial chicken concept called Reys. • Tasty yesterday announced that it has renewed and extended its existing facility. It says ‘the amended facility is for £8 million, consisting of a £3 million revolving bank facility and a £5 million term loan. Both the revolving facility and the term loan are available to the Company for 5 years. The debt provider is Barclays plc.’ The group adds ‘the debt facility provides an additional finance stream, in addition to the Company’s existing cash resources, to allow continued expansion of the Company’s restaurant estate.’ • Black Sheep Brewery is set to expand in the fast-growing market for craft beer with launch of 3 new beers in September • Aldi has launched a youtube channel called ‘The Taste Kitchen’ in order to grow its online presence. • Research from IGD shows that the Chinese grocery market will grow by a third to $1.5tn and India will grow 80% to $900bn by 2020. The fastest growth of the largest markets is reserved for Nigeria, whose grocery sales are expected to expand by 85% to just over $300bn, while Mexico, Indonesia and Turkey are all expected to grow strongly. • Digital consultant Salmon has predicted that this year’s Black Friday on 27 November will be the UK’s first £1bn online shopping day. • Pizza Hut has introduced a pop-up outdoor cocktail and snack bar at its Crawley restaurant as part of its ongoing operational overhaul. • Business secretary Sajid Javid has called an investigation into industry practices with regards to tipping in restaurants. Javid said: ‘I’m concerned about recent reports, suggesting some restaurants pocket tips for themselves. That’s just not right. I’ve ordered an immediate investigation to look at the evidence and consider the views of employees, customers and the industry to see how we can deal with the abuse of tipping.’ • The FSA is relaxing its stance and acknowledging the ‘steadily increasing trend’ of consumers asking to eat their burgers rare. • The limit on contactless payment has been lifted from £20 to £30 and could see more people using the method in bars, pubs and restaurants. A total of £2.5bn of transactions was conducted via contactless in the first half of 2015 compared to £2.3bn in all of 2014. • Kevin Jenkins, managing director of UK & Ireland at Visa Europe, said: ‘Contactless is becoming the ‘new normal’ as everyday Britons embrace the speed, convenience and safety of touch-to-pay technology. We’ve seen unprecedented growth in this area, with the number of Visa contactless transactions more than trebling in the past year in the UK. Today’s threshold increase to £30 gives consumers all the benefits of contactless across a broader range of their daily activities, and we expect to see this momentum continue to build as more people adopt mobile and wearable payment technology.’ Holidays & Leisure Travel: • Asia-based Compass Hospitality and Seacare Hospitality have acquired The Big Sleep Hotels’ three hotels in Cardiff, Cheltenham and Eastbourne. • California judge gives OK to class-action lawsuit v Uber to determine whether 160k Uber drivers in California are ‘employees’. The case could make or break the company’s business model. The FT reports ‘if Uber were forced to take on the full costs of employing its drivers, it could weaken the economic model of one of the most highly valued tech start-ups, and set a precedent that would threaten other companies that rely on organising an army of freelance workers.’ It says ‘the labour costs for most sharing-economy companies would rise by between 25 and 40 per cent if they were forced to switch from being simple marketplaces to full-service companies’ quoting sources at Harvard Business School. Finance & Markets: • Eurozone unemployment fell from 11.1% in June to a more than three year-low of 10.9% in July, thanks in part to Italy. • The Canadian economy has entered recession after GDP fell by 0.8% in the first quarter and then another 0.5% in the second quarter of 2015. The oil-exporting country has been hit hard by the fall in oil prices. • Australia’s GDP grew by only 0.2% in Q2, lower than expected. Commodity slowdown having an impact • World markets sharply lower. UK down, Europe down, US down and Far East mostly down in Weds trading • Oil price lower at around $48.70 per barrel • Markit reports UK manufacturing PMI in August fell unexpectedly to a level of 51.50 v 51.90 in July Retail Roundup from Nick Bubb:ASOS: The Sky News scoop last night about the news that the founder and CEO Nick Robertson is to step down has been confirmed today by the company and it is not a big surprise, as he has been a little disengaged from the business recently, by all accounts, after some well-publicised personal problems. And the COO Nick Beighton has been well groomed as his successor. Nevertheless, the move is pretty abrupt and the new FD only started yesterday. The City will quickly wonder about how the last 2 months trading has been, but there is no mention of that and whether there will be any share sales (as Nick Robertson has a c10% stake in SOS), but he will remain an non-exec. Halfords: Embarrassingly, Halfords has had to rush out a statement this morning to flag that the much-vaunted cycling business has seen LFL sales slump by 11% in the last 8 weeks, with “the weather” said to have put off casual cyclists. Fortunately, the rest of the business has been strong (so that total Retail LFL sales are only down by 1.3%) and gross margins and cost control has been good, so not much damage has been done to full-year profits, which are still forecast to be “broadly” in line with consensus John Lewis Sales Watch: We flagged on Friday that although the weather has turned more autumnal, last week’s trade at John Lewis wasn’t truly “LFL”, given the non-comparable Bank Holiday last year, so Friday’s figures for w/e Aug 29th won’t look pretty, but the key “back to skool” trade will kick in at last this week, with the Bank Holiday a week later this year, and that should enable John Lewis to recoup a lot of lost ground…In other words, this week and last week will need to be taken together to make any sense and the key will be how much the 5 week cumulative outcome improves from the disappointing -3.5% LFL in the first 3 weeks of August/H2. Nick Bubb – nicholas_bubb@hotmail.com |
|