Langton Capital – 2017-04-03 – Fulham Shore, takeaways, ‘competitive socialising’ & other:
Fulham Shore, takeaways, ‘competitive socialising’ & other:
A DAY IN THE LIFE:
The grass in our garden has been heartlessly growing for a month or so and, at the weekend, it was time to give it a good talking to.
And my goodness, what a palaver that turned out to be.
The sit on mower, yes, the man-toy, had a flat battery, two flat tyres and the key was missing.
There was no petrol to be had, the jerry can had gone walkabout (perhaps incinerated in the last major conflagration in the garden (a.k.a. Bonfire Night party)) and the instruction manual had been used as makeshift kindling at some point during the winter.
Furthermore, as the sun was shining and the dog was pining for a walk, the pub was an ever-present temptation but, as the dog was the main suspect when it came to putting teeth marks in the tyres of the mower, his concerns were low down our list of priorities and the grass came first.
Anyway, despite the fact the it took us the best part of two man-days to accomplish, the job got done.
It was difficult, time consuming, unpleasant and expensive but, a bit like Brexit (which may take a billion man-days to effect), after we’d put a couple of stripes in the foot-high grass at limited cost to ourselves up to that point, we were told by our aloof and insulated-from-the-effort-involved-and-the-consequences bosses that there was no turning back.
FULHAM SHORE FULL YEAR TRADING UPDATE:
o FUL numbers in line, aiming for a ‘nationwide presence throughout the UK’. Will open c15 units this year
o FUL updates on trading for full year to 26 March saying will report results ‘in line with market expectations’
o FUL update: Group says it is opening a unit in Italy. It says the seasonal unit will be ‘by the sea, located on the island of Salina, north of Sicily. This will be operated as a franchise and Franco Manca will invest approximately £100,000 alongside local and international investors.’
o FUL update: Co says ‘we have ended the financial year with 45 restaurants, comprising 32 Franco Manca, 12 The Real Greek and 1 Bukowski Grill franchise.’
o FUL reports ‘we opened 13 new Franco Manca pizzeria and 3 The Real Greek during the year, including our first smaller Greek on the Street concept.’
o FUL reports that two openings intended for the current financial year were opened early & were operating by end-March. Co says ‘as a result of this and a 4 month delay to the Franco Manca Victoria opening, our pre-opening costs for the year were higher than we anticipated.’
o FUL opened its 33rd Franco Manca last week (in Putney) & has 3 in build plus a 13th The Real Greek (in Bournemouth)
o FUL reports ‘subject to site availability we expect to end our 2018 financial year with 60 restaurants, comprising 45 Franco Manca, 14 The Real Greek and 1 Bukowski Grill franchise.’
o FUL comments re financing ‘to aid both our increased expansion plans and the strengthening of our central team we have agreed increased facilities with our bank, HSBC, from £6.5m to £15.0m. These new bank facilities have been negotiated at our previously agreed terms and rates.’ It says ‘these bank facilities will enable Fulham Shore to gradually accelerate its opening programme and push for a nationwide presence throughout the UK.’
PUB, RESTAURANT & DRINK PRODUCERS:
o Low levels of unemployment and unsettled EU workers could trigger a delivery driver crunch in the UK as businesses struggle to hire the workers they need. The UK takeaway market is worth more than £6bn but Mariano Mamertino, an economist at recruitment agency Indeed, said delivery driver vacancies have spiked in recent months.
o Growth in the spending power of the average British family ‘has nearly evaporated’, with discretionary income only £3 higher than last year according to Asda’s monthly Income Tracker.
o Busaba Eathai is closing its Manchester site and reviewing options for its Liverpool unit but has stressed that its refurbished sites and new openings are performing well. A spokesperson for the group said: ‘Whilst Manchester has traded positively and we have had some great feedback from our guests, due to the number of openings in the city over the last 12 months, the restaurant is not in the desired position in the agreed timescales.’
o AB InBev has completed the divestiture of the businesses formerly owned by SABMiller Limited in Poland, the Czech Republic, Slovakia, Hungary and Romania.
o A KPMG report commissioned by the British Hospitality Association suggests that a post-Brexit skills shortage could potentially lead to a shortfall of one million workers. This scenario is anticipated if immigration falls to zero from 2019.
o Tower Hamlets council officers have recommended approval for Time Out’s plan to open its first UK food market in Shoreditch. The authority’s development committee will discuss the plans for a site in Commercial Street next Wednesday. It has already been rejected by the licensing subcommittee on the back of concerns from residents, although Time Out immediately announced its intention to appeal. In a report to the committee, the council’s director of development and renewal said: ‘Officers accept that a large number of residents have expressed concerns about the anti-social behaviour levels within the surrounding area and the resultant increase that is perceived by the application but are satisfied that subject to conditions the impact upon local residents can be mitigated.’
o Flight Club, the social darts concept, co-founded by Bounce founder Adam Breeden, has opened its second site in the capital. The concept, which was launched by Breedon, Stephen Moore and Paul Barham has secured a late licensed basement site at 55 New Oxford Street.
o McDonald’s spent more on advertising than any other food and drink brand in 2016, according to the The Grocer’s annual Advertising Report.
o BrewDog is set to grow its turnover beyond £100m for the first time this year – up from £70m in 2016, thanks in part to strong trading at its bars, per MCA.
o Coffee chain Black Sheep Coffee has announced plans to open five new sites in London. The chain currently operates six site in the capital, with the expansion taking the portfolio to 11 outlets.
HOLIDAYS, LEISURE TRAVEL & HOTEL
o Elegant Hotels reports the acquisition of Treasure Beach Hotel in Barbados (freehold & business) for c$10.5m. It reports ‘Treasure Beach is a 4-star, 35-room hotel in Paynes Bay, in the parish of St. James in Barbados.’ Elegant reports ‘the agreement to acquire Treasure Beach is conditional upon completion of a credit agreement with the Group’s bankers, The Bank of Nova Scotia. The condition is expected to be satisfied before the end of April 2017.’ CEO Sunil Chatrani comments ‘Treasure Beach is a resort that we know very well, given its close proximity to a number of our other sites, and it is an extremely attractive property that has been a long-term target for the Group. We are therefore delighted to be acquiring it, given the clear potential for operational and financial synergies, and look forward to integrating it into our portfolio. More broadly, this should be taken
o The British Hospitality Association has warned that if immigration is to become tightly controlled, thousands of business need to drastically reduce their dependence on EU workers. EU workers currently make up a quarter of all jobs in the hospitality sector. A BHA report found that it could take 10 years to reduce the reliance on EU staff by training UK staff.
o The British Chamber of Shipping claim that if Britain exits the EU customs union duty free shopping will be introduced on cross-channel ferries. Duty free for travel has been abolished between EU countries since 1999 and it was estimated that the ‘intra-EU duty free’ system was worth £391m a year to the ferry industry.
o US hotels and airlines are responding to a fall in tourists to the country by cutting prices, per FY. CEO of Expedia, Dara Khosrowshahi, said ‘I think that because of some of the perceived positions coming out of the current administration, the US as a destination is potentially looking less attractive as a product.’ Expedia is set to outline its plans for pricing shifts at its first quarter results next month.
FINANCE & MARKETS:
• Brexit. Cost somewhere between £16-20bn per David Davis & Brexit crew or ‘at least €60bn’ per EU. Current net UK contribution c£8bn.
• Nationwide reports house prices in the UK fell by 0.3% in March for the first time in two years. Year on year, prices were +3.5% vs +4.5% in February. Nationwide report ‘the South of England continued to see slightly stronger price growth than the North of England, but there was a further narrowing in the differential.’
• National Housing Federation reports there is now only one town in England where a low-paid worker could afford a mortgage. Burnley in Lancashire. It says ‘this analysis makes for truly depressing reading. Low-income workers are left with fewer affordable options than ever, even though their jobs are absolutely critical to local economies.’
• UK savings rate now at record lows as consumers borrow to maintain lifestyles per ONS. Savings at 3.3%. Lowest since at least 1963.
o Gibraltar abandoned by May & Davis per some observers. They were aware of what Brexit will cost per others.
o Pimco has suggested that a hard Brexit will negatively impact UK economy. It reports that is why bond rates are so low despite the current surge in inflation.
o Stagflation a risk as inflation rises whilst bond yields & growth rates fall.
o Brokers Cenkos and Numis have blamed Brexit fears for a reduction in the number of corporate deals.
• Inflation slowed in the Eurozone from 2% in February to 1.5% in March per ECB
• Brent up again to $53.42
• Sterling up a little at $1.2548 and €1.1746
• 10yr bond yield in UK +2bps at 1.14%
• World markets: UK markets down on Friday (miners lower) with European markets up. US down. Asia mostly up in Monday trade
• Trump says US willing to deal with N Korea on its own. Might be interesting to 1) watch whether the UK, as a traditional ally, uses N Korea as a distraction from Brexit and 2) keep an eye on the gold price
RETAIL NEWS WITH NICK BUBB:
• “The Daily Retailer” is taking a well-earned rest in the US for a few days, but we’ll be back bright and early on Tuesday.