Langton Capital – 2017-03-16 – Food costs, mobile ordering, interest rates & other:
Food costs, mobile ordering, interest rates & other:A DAY IN THE LIFE: Fitbit yesterday sent out an email offering free delivery on devices bought for your mum (or wife, girlfriend etc.) on Mothers’ Day. It’s on 26 March, in case you were beginning to panic but isn’t buying a Fitbit sending a mixed message? I mean why not buy her some industrial strength deodorant and a bag to put over her head while you’re on the subject of inappropriate presents because like as not it’ll be seen that way and it may take some time to smooth over the implication that anybody, man, woman or beast, could do to lose a bit of weight. Anyway, fresh in the knowledge that Mothers’ Day is the week after next, let’s move on to the news: PUB, RESTAURANT & DRINK PRODUCERS: • F&B on-trade retailers agree on a couple of things. Costs are rising (see below) and the Big Days are holding up well. With that in mind, it’s Mothers’ Day on 26 March. Decent weather would be helpful but, as this is a ‘booked’ rather than a ‘walk in’ type of occasion, it’s perhaps a little less important that on some other occasions. • NPD – Total UK foodservice industry spend rose 2.8% in Q4. This comprises spend per head (driven by inflation) +2.1% and visits +0.8% • NPD – Morning spend +7% in Q4 with lunch +4%. Evening meal spend reported to be down by 6%. • NPD – Reports on-premises food sales down 1.5% in Q4 but off-premises sales +3%. Reflects growth of both grab n go & delivery • Delivery, as noted above, is now a major thing. Watching the Deliveroo cyclists flying around at 6pm of an evening and you maybe don’t need to be told that. Evolution is necessary. Sit down volumes will be under pressure. The only constant factor is change. Mobile ordering is also a thing. See McDonald’s comments below and Starbucks chatter earlier in the month. • McDonald’s has begun testing its US mobile ordering app as it looks to compete with digital ordering leader Domino’s Pizza and newer entrants such as Starbucks. The latter said that in January mobile orders poured in faster than they could be processed, creating backlogs that drove away time-crunched walk-in customers. The fast-food chain began testing its mobile ordering and payment app at 29 restaurants in Monterey and Salinas, California, on Wednesday and is set to introduce it to an additional 51 restaurants in Spokane, Washington, on March 20. • US industry data from MillerPulse has found that same-store sales have declined 2.7% in February, as in store traffic continues to decline. Larry Miller, co-founder of MillerPulse stated ‘We expected a pretty rough first quarter. It’s going to be a low point for the year.’ • Jamie’s Italian is set to open in Reykjavik, Iceland, this Spring inside the historic Hotel Borg, per MCA. The restaurant chain currently operates 42 sites outside the UK and plans to open another 22 overseas units this year. • The BBPA has asked Gloucestor City Council not to introduce a Late Night Levy, which would add further cost pressures to the area’s night time industry. Brigid Simmonds, BBPA Chief Executive, commented: ‘We all want to see a safer drinking environment, but a Late Night Levy is not the right answer. It is an additional tax, not a partnership, and we have seen elsewhere that schemes between local business, the Council and police can produce very positive results without placing an undue burden on local pubs.’ • The Spirit producer, Maison Ferrand, has acquired West Indies Rum Distillery. This is the first time the gin and cognac manufacturer has made an acquisition outside of France. • The budget’s proposal last week to increase the National Insurance levels for self-employed people has been scrapped. Philip Hammond has U turned on breaking the 2015 manifesto pledge stating ‘There will be no increases in National Insurance rates in this Parliament.’ • Sainsbury updates on Q4 trading, says it has seen ‘solid food performance at Sainsbury’s and good growth at Argos.’ Combined, the co is +0.3% LfL in terms of sales. SBRY is +0.1% and Argos is +4.3%. CEO Mike Coupe says ‘we are pleased with this performance and are making good progress against our key priorities.’ He says ‘the market remains very competitive and the impact of cost price pressures remains uncertain. However, we are well placed to navigate the external environment and remain focused on delivering our strategy.’ HOLIDAYS, LEISURE TRAVEL & HOTELS: • Holiday market continues to evolve, cruising more popular • An 11.2% increase in river and 6.7% rise in ocean cruises have marked another year of record growth for the UK cruise market. Clia’s annual cruise review reported that 1.9 million people were passengers on ocean cruises with river cruises growing to 166,900 passengers. Andy Harmer, a senior vice president at Clia, said ‘The increase in passenger figures is a testament to the industry’s resilience to economic and political change and further demonstrates the value that a cruise holiday offers.’ • US hotelier discovers Europe exists. • Marriott International has announced its European expansion plans for 2017. The firm plans to build on its 70% increase in the region last year by expanding ‘Courtyard’ rooms from 10,000 to more than 22,000 and ‘Moxy’ to 19,000 rooms by the end of the decade. • Destination Canada is aiming for a 5% increase in UK visitor numbers this year, on the back of a 17% jump in UK arrivals in 2016 to 833,329. David Goldstein, chief executive of Destination Canada, said: ‘The UK is our second largest market after the US and to see that kind of growth is really spectacular. We have set ourselves a conservative growth target of 5% in 2017, but speaking to our partners in the trade we believe there is an opportunity to exceed that.’ OTHER LEISURE: • Playtech founder & major shareholder Teddy Sagi has sold a further 4% of the company in order to focus on property dealing. Mr Sagi comments ‘Playtech is a company which I believe will continue to achieve significant growth over the coming years.’ However, he wishes to ‘further develop my London property portfolio and be at the vanguard of the co-working revolution’. Mr Sagi sold 12% of the company in November and has now agreed not to sell further shares for 6mths. • Shares in Snap Inc hit a new low on Wednesday of $20.05 this week as analysts questioned the company’s prospects and slowing user growth. The social media platform has widening losses and outside investors have a lack of voting rights FINANCE & MARKETS: • The US Fed has, as expected, put up its core interest rate by 0.25%. The US$, which had been anticipating a rise, fell slightly on the news. Betting is running c60% in favour of a rise in June. The Fed has said that it favours two more rate rises during calendar 2017. • Fed Chair Janet Yellen says ‘we have seen the economy progress over the last several months in exactly the way we anticipated.’ She adds ‘we have not discussed in detail potential policy changes that could be put into place and we have not tried to map out what our response would be.’ • Forward guidance, remember that? In 2014, the Bank said it would put rates up (from 0.5%) if unemployment fell below 7%. Today it is 4.7% and rates have actually gone down from 0.5% to 0.25%. • Budget guidance also torn up. The Chancellor has dropped plans to raise National Insurance charges for the self-employed. Labour called the move ‘shocking and humiliating’. Some have suggested that Brexiters on the Tory backbenches have feigned outrage in order to put pressure on Mr Hammond (whom they consider to be somewhat half-hearted when it comes to breaking up the Union). The Telegraph says that the climbdown, which it credits to Mrs May’s pressure, is ‘hugely damaging’ to Mr Hammond & it quotes unnamed MPs as saying that he is now ‘on probation’. • UK unemployment is now at its lowest level, 4.7%, for 41yrs. Some 1.58m people are out of work. • Average wage growth in the UK has fallen to 2.2% in the 3mths to end-Feb compared to 2.6% in the prior period. Real growth is now at its lowest since November 2014. • Brent up a little at $52.15 • Sterling up vs US$ at 122.66c (was 121.84c. • But down vs Euro at 114.33c vs 114.56c. • UK 10yr gilt yields down a little at 1.21% vs 1.23% yesterday • World markets: UK, Europe & the US all up yesterday. Far East markets higher in Thursday trade YESTERDAY’S TWEETS: • Later tweets: Unemployment in 3mths to Jan down to 4.7%. Mark Carney said, admittedly in 2014, he would put interest rates up if u/e fell below 7% • Average wage rise only 2.2% down from 2.6% previously. Compares with 1.8% CPI and 2.6% RPI. Workers cash strapped • Food rising rapidly. Very selective. Feeder cattle price down 21% in last 12mths (admittedly in US$s) • US rates likely to rise at 6pm UK time. Near 100% agreement. Odds now 60% on a further rise in June. Long march upwards begun… • Deflation is dead, long live the successor. Err, inflation. PPI in US now 2.2%, UK stats out next week. At least wage growth is slowing • Feb Tracker in 140 characters. LfL > zero but < CPI, new capacity c3%, London > provinces, restaurants > pubs. There, will that do? • Crowdfunding. Too much money? Search for a return. Bubblesville. Where will all the new customers come from? RETAIL NEWS WITH NICK BUBB:
• Sainsbury: Today’s Q4 update is for the 9 weeks ended March 11th, so it is “bang up to date”, as former boss Justin King always used to say, but it is distorted by the fact that the last week included Mother’s Day last year. Sainsbury don’t make as much of a fuss about that as we’d expected, but the overall Supermarket LFL looks a bit disappointing at -0.5%, although they do point out that General Merchandise sales were down by 4% over the quarter, impacted by this year’s later Mother’s Day and Easter (despite good Tu clothing sales). However, Argos did well, with the overall 4.3% LFL sales growth driven by “strong sales growth in technology categories, with particularly good contributions from mobile phones, video gaming, wearable tech and sports equipment”. In terms of the outlook statement, the best that CEO Mike Coupe can say is that “The market remains very competitive and the • News Flow This Week: The latest MPC interest rate announcement is out at mid-day and this evening Marks & Spencer is holding its “Spirit of Summer” Food press show in the West End.
• TIPS Watch: The great Cheltenham Festival jumps racing continues into its third day today and our alter ego, “Honest Nick”, is bringing you his each-way Tips each day. Now, the great Irish trainer Willie Mullins had another poor day yesterday, with the mighty Douvan trailing in 7th in the big race, and we didn’t find a winner either, but our Messire Des Obeaux came third at 8-1 in the 1.30. However, Mister Miyagi had no luck in running in the 2.50 and Long Call was disappointing in the 4.50, so we need to redouble our efforts today…In the first race, at 1.30am, we’re taking on the Willie Mullins trained favourite Yorkhill with the estimable Top Notch e/w. In the 2.10 we’re tempted by Electric Concorde, inter alia. In the last race at 5.30 we’re going with Southfield Royale and in the 4.10 we’re going with Art Mauresque. So our “Three to Follow” today are Top Notch e/w in the 1.30, |
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