Langton Capital – 2016-06-06 – Restaurant Group, food delivery, budget hotels & other:
A Day in the Life:
So we’re in England again having travelled back from Northern Germany and Holland (patchy internet, 26 degrees) via Zeebrugge to Hull, the Venice of the North, the Pearl of the Umbeh, where the internet was much better but where the temperature Sunday morning was a bracing nine decrees Celcius.
And that was a bit of a shock to the system as was having the car searched twice for the Albanian and Syrian refugees that the authorities felt must be hiding in our dirty washing in an attempt to make it from Holland (26 degrees, etc., etc.) to Hull.
Anyway, that’s that so, with a bit of catching up to do, let’s move on to the news:
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• Crystal Amber reported to have taken 1% stake in Restaurant Group. Investor last seen in Thornton. Given the halving of RTN’s share price over the last few months, this is hardly a surprise. The Sunday Times reports ‘Crystal Amber is known for agitating for deals in many of its holdings. A source close to the fund said there would be “huge cost synergies” if The Restaurant Group was combined with another operator. He added: “It’s got a share register with growth investors, and it’s no longer growing.”’ See earlier Langton emails.
• Uber reported ready to expand its food delivery business in the UK, take on Deliveroo. BuzzFeed News reports that Uber is recruiting a team of bicycle and moped drivers in London. BuzzFeed News reports UberEats as saying it ‘has been hugely popular in every city around the world we have launched it in, so the fact we are exploring the UK market shouldn’t come as a surprise. We’re always looking at what other services we can bring to the market here.’
• The Sunday Times has reported that some Deliveroo moped riders & cyclists have been caught ‘jumping red lights, crashing into pedestrians, cycling without lights and mounting pavements.’ It says ‘despite claims of “top notch riders” in its advertising, the company is facing a growing number of complaints about “dangerous” cyclists and bikers breaking traffic laws, causing crashes’.
• Moody’s has reported that Suntory’s sale of First Kitchen & Coca Cola FEMSA’s purchase of Ades are both Credit Positive
• The Telegraph reports CEO of Tossed Vincent McKevitt aas saying that he would like to see his business develop into the next Pret. The Group, which was found in 2005, currently has 24 sites. McKevitt says ‘central London is becoming increasingly expensive. We’re looking at other opportunities but the aim is the same: good carbs, lean protein, and getting your five a day.’
• Enterprise Inns Friday bought back 102k of its own shares at around 98p
• Sunday Times reports that Japanese brewer Asahi is considering a £5bn approach for a number of SABMiller’s eastern Europe brands
• Diageo is reported to be exploring options for its Scottish businesses should the region wish to exit the UK post any Brexit vote
• The managing director of Amber Taverns has warned that a poor performance by England at this year’s Euros would affect trade. Speaking to MCA, James Baer added that the ‘worst case scenario is if England flop from the start and one of the familiar favourites starts romping to victory’.
• Miles Templeman, the former non-executive chairman of YO! Sush and current non-executive director of Shepherd Neame, is to become new chairman of Chop’d. Templeman will take over from Chris Sanders, who has helped grow the salad bar chain to thirteen sites.
• Activity in the UK’s service sector picked up last month to 53.5 from 52.3 on the Purchasing Managers’ Index, although the figure remains ‘subdued’. Markit chief economist Chris Williamson said business is being hurt by uncertainty around the upcoming Brexit vote, and that the ‘frustratingly weak’ UK service sector is more important than ever following a ‘collapse’ in manufacturing and construction.
• Inception Group founders Charlie Gilkes and Duncan Sterling are teaming up with wives, Anneke Gilkes and Zoe Sterling, to launch all day fast-casual concept Squirrel, writes MCA.
• The ALMR has welcomed a European Commission report that says the sharing economy provides a source of job creation and should not be compromised by heavy regulation. ALMR Chief Executive Kate Nicholls said that regulatory authorities should maintain a light touch, saying: ‘A similar approach should be taken regarding traditional businesses models to ensure a degree of flexibility for pubs, bars and restaurants. At present, licensed hospitality businesses operate under a rigorous licensing regime which can stifle evolution. A similar, proportionate approach that protects consumers, but frees up businesses would be welcome for licensed hospitality.’
• Bilfinger GVA Hotel Consultancy reports hotel development is currently dominated by economy brands. It says re the alternative expansion of upscale brands ‘whilst there may be a market opportunity for such a development, the economics often simply don’t stack up for a commercial developer. There is often a significant funding shortfall caused by two primary factors: 1. A lack of institutional grade leases for this type of hotel makes it very difficult to forward fund the development. Management agreement I s the more likely delivery platform; 2. Construction costs are often significantly higher for this type of hotel (due to additional facilities, larger rooms, higher specification finishes etc.), often resulting in a low internal rate of return (IRR) and possibly a development loss at practical completion.’
• Ryanair has reduced its bag charges by up to 50% for passengers on flights under three hours in length as the Dublin-based airline cuts down on fees. The changes are expected to help out nearly 92% of its passengers will benefit from the reduced costs.
• Heathrow has published a series of iconic images as the airport marks its 70th anniversary.
• US hotel industry occupancy rose 10.6% to 70.1% in the week to 28 May, as average daily rate increased 7.7% to $124.08 and revenue per available room jumped 19.1% to $86.95.
• Fosun is in advanced talks to acquire a 10 to 15 percent stake in Compagnie des Alpes, which specialises in ski resorts and family parks, according to Le Monde.
• The ocean cruise industry is expected to handle more than 24 million passengers this year, according to Clia figures, as the market continues to beat forecasts. Much of the growth in global cruise numbers is being driven by the Asian market, which saw a 24% rise in passengers in 2015 to more than two million ocean cruise travellers.
• Air France stewards are planning to go on strike from 27 July to 2 August over negotiations on a new work and compensation deal set to take effect in November. Separately, pilot unions have called for strikes over pay that will stretch into the first week of the Euros, following weeks of protests against a planned labour law reform.
• An IATA forecast shows airlines making a record breaking profit of $39.4bn on revenues of some $709bn in 2016, which would make it the fifth year in a row of industry profit growth. Some have warned that airlines are failing to pass on cost savings from low oil prices to passengers. ‘Lower oil prices are certainly helping—though tempered by hedging and exchange rates. In fact, we are probably nearing the peak of the positive stimulus from lower prices,’ said IATA CEO Tony Tyler.
• The Telegraph reports ‘Goals Soccer Centre will kick off a £7.9m branding overhaul later this year’. It says the group has ‘plans to unveil two redesigned pilot clubhouses which will pave the way for a full revamp of its football centre estate.’
• Telegraph says re Goals ‘the troubled five-a-side pitch operator has enlisted the help of branding experts at McCann Enterprise to position itself as a premium player in crowded football centre market.’
• Goals last week raised £16.7m via a share placing at 100p per share. The group’s shares were trading at around 215p a year ago.
• Sportech has reported that the HMRC has applied directly to the Supreme Court for permission to appeal the Court of Appeal’s unanimous judgment (in Sportech’s favour) re its £97m VAT reclaim ruling. The group says ‘Sportech will file its Notice of Objection to such application by next Monday, and has been advised that it should expect to hear by the Autumn whether HMRC has been granted the right to appeal to the Supreme Court.’ It says ‘the Group will provide shareholders with any further updates in due course.’
• Moody’s says MGM Resort’s acquisition of the remaining shares in Borgata that it does not already own in Credit Positive
FINANCE & MARKETS:
• US private employers added 173k jobs in the country in May. This was a shade below expectations of around 175k
• World markets: UK mixed on Friday, Europe down. US markets down and Asian markets lower in Monday trade
• Brent trading at a whisker under $50 per barrel
• 40yr mortgages now on offer. Then surely heighten the risk of sucking in unprepared first time buyers and increasing costs overall. In the 1980s, Japan famously made available ‘multi-generational’ 100yr mortgages. Property prices there subsequently crashed.
Retail Roundup from Nick Bubb:
Saturday Press on BHS and Philip Green:
Other Saturday Press:
Sunday Press on BHS and Philip Green:
Other Sunday Press:
Today’s Press and News:
News Flow This Week: After the collapse of BHS rescue efforts, the continuing Parliamentary inquiry into BHS will get even more attention this week (with the appalling Dominic Chappell due to appear on Wednesday)…but there is plenty of other stuff going on. A busy week kicks off with the BRC-KPMG Retail Sales for May tomorrow morning (with better weather likely to push overall LFL sales up a bit for once). Wednesday then brings the Shoe Zone interims, the AO World finals and the Sainsbury Q1, with the Home Retail (Argos) Q1 following on Thursday. On Friday we get the Bonmarche finals and…the start of Euro 2016 in France. Nick Bubb – email@example.com