Langton Capital – 2017-11-10 – Snoozebox, escape games, street food, margins etc.:
Snoozebox, escape games, street food, margins etc.:
A DAY IN THE LIFE:
So, as the octopus got a mention in yesterday’s Day in the Life and the Song of the Day was Octopus’s Garden by The Beetles, what’s the plural of the word?
Apparently, octopuses and octopi will be accepted but, some purists maintain, as the word is of Greek rather than Latin origin, the plural should be octopodes.
And I did not know that. Have a good weekend, bit more frost on Sunday. On to the news:
THE FUTURE OF STREET FOOD:
• The latest Kerb panel discussion on the evolution of street food has heard that capital is now ‘flooding in’ to the sector. The food is ‘good, cheap & accessible’ says Bleecker Burger founder Zan Kaufman.
• The Kerb event heard that food in many places was no longer cheap. At £8 or so for a meal, some customers were put off by the price whilst others told vendors that they were concerned with animal welfare, etc., and suggested that they would be willing to pay more for their food if its provenance was to their liking. Organic food ‘costs around 30% more’.
• Vendors implied that they would have to charge 30% more but, if they focused on cash margin rather than percentage margin, this is not necessarily the case.
• Zan Kaufman told the event that vendors cannot be entitled. They need to work hard and there isn’t a lot of money to be made in the business. Sales are lumpy and seasonal. Some vendors leave the country for the winter. Others see overseas vending (at festivals and the like) as an interesting business, but it’s one in which it’s easy to lose money.
• Kerb’s audience paid lip service to their dislike of gentrification though the panel made it clear that decent street food was often a step in that direction. Street food ‘can be a conduit to growth’. Property owners may let out car parks etc. to street food vendors in order to encourage footfall before development commences.
• Kerb itself is looking for iconic spaces. Food courts are competition of a sort. Some operators, such as Bleecker, move from street to food court in a process of evolution.
• Street food. Councils could be more helpful. They could give 14dy licenses etc. Developers are a curate’s egg. They can be helpful on occasion. At other times, they want street food vendors to go in too early, when there are few customers in evidence.
• Exciting concepts? Vegan, doughnuts (really), iced-cream sandwiches.
• Drink is very important. It needs to be street. Labels need to be carefully thought out. Provenance is critical etc.
PUB, RESTAURANT & DRINK PRODUCERS:
• London is now home to 24 gin distilleries — one fifth of the total number in England. Four London distillers have teamed up with the Wine and Spirit Trade Association, and 17 other distilleries nationwide, to write to the chancellor calling for him to scrap planned duty rises for the second time this year. In March the chancellor increased spirit duty by inflation at 3.9% which added 30p to an average priced bottle of spirits. Yet despite the rise, the chancellor now plans another increase to spirit duty again, just 8 months after the last one, by 3.4% adding another 26p to bottle.
• Fuller, Smith & Turner has revealed the winner of its annual Pub of the Year competition, The Griffin Trophy, is The Old Customs House, Gunwharf Quays.
• Alasdair Murdoch is to step down as CEO of c90-strong Gourmet Burger Kitchen, which was acquired by Famous Brands in October 2016, per MCA. Chief operating officer Keith Bird and group operations director Karen Stone are also leaving the business as Famous Brands looks to grow the GBK brand in a tough market.
• 3Sixty Restaurants has put its remaining Rocket bar and restaurant site in Nottingham on the market, having sold the rest to Novus earlier this year.At the time, Horler, chief of 3Sixty Restaurants, said: ‘The sale of Rocket to Novus makes a lot of sense. We are very focused on an organic self-funded growth of Ego in pubs throughout the regions and have opened six sites already with another two in the immediate pipeline. This will take the Ego estate to sixteen.’
• Gruppo Campari has posted strong sales in its core markets, with sales up 8.1% in the first nine months of the year to €1.28bn.
• MCA writes that US better burger chain Smashburger, which currently operates six UK sites and will open its seventh soon, is to offer delivery through Deliveroo Editions. Smashburger intends to open 10 restaurants in the UK over the next 12 months and has confirmed sites in Glasgow, Dunfermline, Wednesbury, and Inverness. By the end of 2020, the burger brand hopes to have 35 UK restaurants.
• Harden’s reports that the average price of dinner-for-one at one of London (admittedly posh) restaurants increased 3.6% in the year to August. Inflation for the year under review was 2.9%. Harden’s found that the average price of a meal was £53.20 at one of the restaurants featured in this year’s Harden’s London Restaurant Guide.
• Harden’s reports that fewer independent restaurants opened in London in the last 12mths compared with the year before. It said that net openings were down by 12%.
• NRN in the US reports that October LfL sales moved into the black after several months of losses. The last positive month was May 2016. Some of the growth was a bounce back from hurricane-impacted sales in September. NRN says ‘the 0.9-percent same-store sales growth last month was the industry’s best result in more than two years, according to TDn2K data.’
• In the US, Zoe’s Kitchen is slowing its growth plans for 2018. Rave Restaurants said the same thing the previous day. Some observers suggest that the US market has been suffering from over-capacity.
• Hard Rock International plans to open in a new UK flagship site in London’s Piccadilly in May 2018.
• Zeev Godik, founder of Argentine steak operator Gaucho Group, is to step down as chief executive of the group less than a week after ex-Asda CEO Paul Mason replaced Luke Johnson as chairman. Godik said he wanted to consider new opportunities in Dubai where he and some of his family now live.
• The Wendy’s Co. has joined a growing list of big restaurant chains making a concerted push into the delivery market. The group will expand its delivery partnership with Door Dash to 2,500 locations in 48 markets by the end of the year.
• The Pub Governing Body (PGB) has reminded licensees with agreements covered by the statutory code that the PIRRS low-cost tied rent resolution service is available as an option if there are disagreements over tied rents, even if the Market rent Only (MRO) option has been initiated. Pub Governing Body chairman Sir Peter Luff said: ‘We are pleased that the PIRRS procedure has been made available for those pubs, companies and operators that wish to use it, even if they are covered by the statutory code and are in the process of looking at a Market Rent Only option. We remind companies and tenants that this service remains available, and that PIRRS can be used to resolve tied rents on a case-by-case basis, if both parties mutually agree. We believe that this element of the PIRRS service is a positive step which will benefit both companies and tenants.’
HOLIDAYS & LEISURE TRAVEL:
• Snoozebox called in administrators earlier in the week. It’s zombie status had persuaded us that it had effectively done so in spirit some time ago. For the record, that co announced that ‘it is now the Directors’ view that the Company and SQN [the group’s main lender] will be unable to agree a suitable debt servicing plan or longer-term capital structure for the Company and without SQN’s support the Directors have concluded that the Company is unable to continue as a going concern.’
• Snoozebox reports ‘the significant debt burden taken on by the Company in 2014 has been one of the Company’s largest challenges given the poor financial and operational position of the Company when the Directors commenced restructuring in early 2016.’ It says the ‘outcome is clearly very disappointing for shareholders.’ Nomad Panmure Gordon has resigned, the group’s shares have been suspended and Moore Stephens will administer the company.
• The US hotel industry saw occupancy fall 0.9% to 63.3% in the week to 29 October despite a 0.4% ADR increase to $124.08. RevPAR declined slightly by 0.4% to $78.57.
• New research claims 85% of UK travellers use peer-to-peer reviews to research trips. However, the survey also showed that only 62% of UK travellers said digital boarding passes made travelling easier, compared to a global average of 71%.
• Hotelscan, a Swiss metasearch site, has been acquired by Lastminute.com Group and will enable the group to expand its offering.
• Alexandre de Juniac, Iata director general & chief executive, has urged for an early resolution for aviation in Brexit talks saying ‘when [the UK] breaks from the European Union, all traffic rights to the rest of the world associated with Europe will also be thrown into question.’
• The BBC reports that Monarch Airlines is not allowed to sell its summer 2018 runway slots after a ruling in the High Court. Monarch administrator KPMG said the slots could have been worth up to £60m with Wizz Air and Easyjet showing interest in the slots.
• EU citizens will no longer require a visa in order to visit Cape Verde according to its minister of tourism Jose Gancalves. The new rules are set to come into force in May or June next year.
• The Paris Region Tourist Board said UK visitor numbers to paris dropped by 1.5% yoy in the first semester of 2017.
• Escape Games company Escape Hunt has reported that it will open multi-room sites in Birmingham and Oxford next year.
• Walt Disney profits fell in 2016 for the first time since 2009, although shares rallied after it announced a deal to make three new Star Wars films. The entertainment giant plans to launch a sports-focused ESPN+ app in the spring, and a Disney streaming service in 2019. Disney boss Robert Iger said those investments, which add to an existing Disney subscription service in Europe, are ‘vital’ to the firm’s future. ‘Our goal here is to be a viable player in the direct-to-consumer space, a space that we all know is a very compelling space to be in,’ he said on Thursday, after the firm published its results for its financial year, which ended in September.
• Snapchat has announced its first European store will be located in Boxpark Shoreditch.
FINANCE & MARKETS:
• The ECB economic bulletin has reported that Euro-zone economic growth is continuing into H2 and Q3 of this year
• Fed OMC member John Williams has suggested that US rates will rise in December and says they will go up a further 3x in 2018.
• Oil up 25c or so at $63.81
• Sterling up a fraction vs dollar at $1.3139
• Pound down vs Euro at €1.1283
• UK 10yr gilt yield up 3bps at 1.26%
• World markets: UK down yesterday with Europe & US also lower. Markets in Asia mostly down in Friday trade
• Official forecasts coming out of Brussels have suggested that the UK will see the slowest growth of all 28 countries in each of the next 3yrs. Until last year, the UK had grown more rapidly than the Eurozone in each year since 2011.
• EU expects UK growth of 1.5% this year, 1.3% next year and 1.1% in 2019 when Brexit formally takes place.
• Brexit etc.
o Financial Times reports Brexit has broken British politics
o Express huffs that EU leaders are beginning to suspect Jeremy Corbyn will lead the UK’s exit talks
o Guardian reports IPPR North as saying post-Brexit trade problems will hit the North of England hardest in UK
o EU reported to have given UK 3wks to make a Brexit cash offer
PRIOR DAY’S LATER TWEETS:
• Later tweets: Dual kitchens enable operators to run dine-in & delivery options without intrusion. Good idea but may be logistically challenging
• Trends. Experiential, VR in pubs & England could be smoke free in 12yrs if switch to vaping continues
• Travel sector urges London not to push ahead with a planned tourism tax. Seen as cynical & opportunistic on back of cheap Sterling
• MKS to slow expansion of food units & cut costs elsewhere, could put further pressure on High St.
• Bank indicates rates at 1% by end-2019. Also sees rising wage pressure. The two may not be compatible
START THE DAY WITH A SONG:
Yesterday’s song was Octopus’s Garden by The Beatles. Today’s lyrics are:
It’s alright to feel like a fat child in a pushchair,
Old enough to run,
Old enough to fire a gun
RETAIL NEWS WITH NICK BUBB:
BDO High Street Sales Tracker: We flagged on Wednesday that John Lewis had another very tough time last week, but the problems were in Home/Electricals rather than in Fashion. Today’s BDO High Street Sales Tracker for small/medium-sized Non-Food chains last week flags that w/e Nov 5th saw Fashion Store LFL sales edge up by 0.2% (versus quite a tough comp of +5.1% LFL a year ago), helped by a shift towards cooler weather and fairly widespread discounting activity. Including Homewares and Lifestyle chains, total Store LFL sales were up by 0.4% last week (versus +5.4% a year ago). And overall Online sales were up by 16% (against +20.3% a year ago).
Trade Press (1): The front cover of today’s Retail Week magazine flags up a feature entitled “Can retail stop its tech brain drain?”, noting that “as digital talent moves out rather than up, we ask if the industry needs to reconsider how it hires”. RW also have a feature on Delivering Innovation (five companies changing supply chains, from warehousing to payment). In terms of News stories, RW focuses on the news that Arcadia is likely to axe hundreds of head office roles in an effort to increase efficiency and streamline the business and that New Look posted a nosedive in profits and sales at the half-year mark as it drafted in former boss Alistair McGeorge as executive chairman. And in his column the Editor of RW looks ahead to the M&S results and thunders that “Norman and Rowe could be a dynamic duo for M&S”.
Trade Press (2): In today’s Drapers magazine the Editor looks in her column at the sale of the Hobbs fashion chain to The Foschini Group and thunders that “the sale of Hobbs to the Phase Eight and Whistles owner TFG London provides a glimmer of light on an otherwise gloomy high street in the run-up to Christmas”. The main News story is the jobs cuts at Arcadia, Mothercare and Pentland (“Jobs cull as retailers and brands restructure”). The main feature is the always excellent “Hit or Miss” survey of Autumn fashion, which continues with a look at Footwear stores in Lakeside.
News Flow Next Week: Tuesday brings the B&M interims and the Land Secs interims, together with the latest Kantar/Nielsen grocery sales data. Card Factory are also expected to issue a Q3 trading update that day. On Wednesday we get the Game Digital finals. Thursday brings the British Land interims and the ONS Retail Sales figures for October, plus the Asda/Wal-Mart Q3. And it’s been a long time coming, but…by the end of next week the CMA will issue its delayed provisional findings on the Tesco bid for Booker.