Langton Capital – 2017-04-20 – Dining trends, US industry woes, London pubs & other:
Dining trends, US industry woes, London pubs & other:A DAY IN THE LIFE: Apologies to some recipients (or rather Wednesday’s non-recipients) of our email as yesterday we had an unusually large number of bounces. It’s not yet clear why but hopefully the problem will not recur. In the event of non-deliver to mail boxes, the email is always on the website by around 8am. Anyway, moving on to the dog. He’s thick but not completely thick and, as he knows we must shut him in the house when we go out for an hour or two, he’s begun to protest via a sit-in (in the garden), which he’s only prepared to break if you feed him. He’d prefer a bit of bacon but his willpower is such regarding food that a piece of bread will suffice but, in a piece of devilish logic that we’ve only just worked out, he’s now begun to moan and whine to go out just in order to be bribed to come back in again. Proof, of course, that a dog will always be on the wrong side of any door you put him on. On to the news: PUB, RESTAURANT & DRINK PRODUCERS: • UK eating out data produced by the MCA has shown falls in the percentage of people eating out, frequency and average spend in March. For the first time since October 2015, menu inflation has not been enough to increase the average spend of diners. • Data from the MillerPulse survey has shown that the US restaurant industry has suffered ‘the worst quarter in seven years’. Like-for-Like sales were down 0.4% in March, the fourth straight month of decline. Co-founder of the survey Larry Miller compared to a fall in like-for like sales of 2.5% in February, March ‘was a better month, it’s good to see things turn up. But it doesn’t make us confident we’ve past the difficult part yet.’ • Caffe Nero has developed its first mobile payment and loyalty app in collaboration with Yoyo Wallet. The app will replace the chain’s blue stamp loyalty card, which is currently used by nine million customers yearly. Caffe Nero founder, Gerry Ford remarked ‘Making our loyalty card available on our customers’ phones whilst also including an integrated payment system is a win-win. It still rewards customer loyalty and makes paying fast and easy.’ • The Scottish craft distillery, William Grant & Sons, has acquired US based whiskey producer Tuthilltown Spirits. • The Wine Society has stated that Brexit has not affected consumer confidence nor wine sales. Head of buying at the Wine Society, Pierre Mansour said ‘In November we were predicting things might get quite tough and we might see a change in consumers behaviour similar to what we saw in 2008, but that has not happened and we had the best ever trading at Christmas.’ • The ALMR says it is ‘hugely encouraging’ to see the Mayor of London ‘acknowledging the vital contribution being made by pubs’. City Hall has outlined plans to reduce the rate of closures in London, highlighting the important contribution pubs make to the city’s culture and night-time economy and is inviting correspondence on how to promote the sector. • The BBPA’s Brigid Simmonds commented: ‘Mayor Khan rightly highlights the negative impact of high business rates – many London pubs have seen huge increases in their rates bills. I would also welcome support to tackle the sky-high rates of beer duty in the UK, which is another huge burden on London’s brewers and pubs, following the 4 per cent beer tax rise in the Budget.’ • Le Pain Quotidien has reported numbers to end-December 2016 showing revenues up by 11% at £38.2m. The group’s gross profit margin slipped from 20.2% to 19.6% and PBT was £907k vs £987k last year. • Le Pain reports for 2016 that ‘increasing sales and maintaining margin has been the primary focus’. It says ‘gross margin was within expectations at 19.6%’. • Ikea is considering opening standalone restaurants and cafes in urban centres, according to an interview Michael La Cour (IKEA Food Business MD) gave to Fast Company magazine. The retailer already has a few pop-up restaurants in Europe. • PayPal has entered into a new partnership with Android Pay for mobile payment, as the group looks to expand its presence in app industry. The service will be available now in the US. • SHS Drinks is reformulating its Schloer range ahead of next year’s sugar tax. • Tesco will sell its opticians business, which consists of 206 Tesco Opticians outlets inside its UK supermarkets, to Vision Express as part of the former’s ongoing simplification of the company. HOLIDAYS, LEISURE TRAVEL & HOTEL • The board of Accor Hotels has opposed a move by shareholders to scrap double-voting rights at the company. The board reports ‘following deliberation, the board of directors unanimously resolved not to approve this resolution.’ It says ‘the board emphasised that the value attributed to shareholder loyalty and stability which this double voting rights mechanism for shareholders registered for at least two years contributes to encourage.’ • TravelSupermarket.com says that the 8 June snap general election will create two camps of summer holidaymakers — those cautious about booking before the outcome is known and those keen to escape ‘the madness’ and get away. • A study by shopping and fundraising website Give as you Live suggests that the average British family will spend two and a half month’s wages on their summer holiday this year. A family of four will spend an average of £1,284.54 per person – the equivalent of two and a half months’ pay, based on the average wage of £28,000 in the UK. This is up from £1,074.60 per person in 2016. OTHER LEISURE: • Bowling alley operator Ten Entertainment Group has announced that its shares have been admitted to the Official List and will be traded under the ticker TEG. • Director Adam Kaye last Thursday bought 25k shares in Everyman Media Group at 127p per share. Mr Kay now owns 4.7m shares • Premier League clubs clocked up a record £3.6bn of revenues in 2015-16, per Deloitte, the two Manchester clubs were responsible for more than 50% of the increase. Increased player expenditure, operating costs and one-off charges made for a pre-tax loss of £110m for the season, however. This comes after two consecutive seasons in the black. Some £2.3bn was spent on players’ wages, up £300m on the previous season, while there was a total of £400m spent on ‘net player trading’. FINANCE & MARKETS: • Still struggling to throw off its image as the Boy Who Cried Wolf, the IMF has said that global financial stability has continued to improve. It warns that there are still risks ahead. Stronger growth means that households should be less-stretched. • The Eurozone’s seasonally-adjusted trade surplus widened to €19.2bn in February from €15.7bn in January • Oil down a buck and a half at $53.15 • Sterling a little down vs US$ at 1.2805 • Pound also a little lower vs Euro at 1.1936 • UK 10yr gilt yield up 5bps at 1.06% • World markets: UK mixed yesterday with large caps underperforming. European markets up, US down but Asia up in Thursday trade YESTERDAY’S LATER TWEETS: • Later tweets: Stronger pound (on back of June 8 poll, stronger growth forecasts) may mitigate some inflationary impacts of earlier falls • Experiential offerings benefit (ping pong, crazy golf, darts, escape rooms etc.) as vertical on-trade drinking declines. See email • MOD Pizza drops £5m in operating losses before opening a store, invests further £4.9m in capex. All as planned, apparently • Five Guys UK lost £9m in calendar-2015 (the latest figures available) whilst JV partners dropped another £4m. Paying too much for sites? RETAIL NEWS WITH NICK BUBB:
• Debenhams: The much-awaited Debenhams strategic update today overshadows the interims (for the 26 weeks to March 4th), but they are said to be “in line with expectations”, with UK LFL sales up by 0.5% and PBT down by 6% to £88m. But the implication is that Debenhams is, like other department store chains, running up a down escalator, so the emphasis in the new strategy, Debenhams Redesigned, on delivering “Growth” (“by becoming a Destination, Digital and Different”) and driving “Efficiency” (“by simplifying and focusing our business”) sounds positive. All this will require more capital expenditure and exceptional costs, but Debenhams have failed to take the opportunity to offer shareholders any sales or profit targets against which the new programme should be judged, which is disappointing. We are sure the new CEO Sergio Bucher is capable of showing off some exciting new store • John Lewis Partnership Sales Watch: We flagged a week ago that trading would look better for JLP last week (after a tough March), as the Easter calendar shift unwound. And at John Lewis, total sales jumped by 11.7% gross (nearly 10% up “LFL”) in w/e Apr15th. John Lewis is now running up 1.2% up gross (c0.5% down LFL) on a cumulative basis over the last 11 weeks. Over at Waitrose the warm weather also gave a boost to last week, as in w/e April 15th Waitrose sales were up by 25.5% gross (up c23.5% “LFL”), albeit against the same pre-Easter week last year sales were only marginally up. Over the last 11 weeks combined, Waitrose is now running 2.6% up gross (c0.5% up LFL). |
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