Langton Capital – 2018-09-18 – Escape Hunt, DPP, brewery numbers, exports, trade etc.:
Escape Hunt, DPP, brewery numbers, exports, trade etc.:
A DAY IN THE LIFE:
There’s a lot of truth in the saying that you can’t teach an old dog, new tricks.
And, indeed, it’s pretty hard to get them to unlearn something as they’re OCD in the extreme and, if they think the sound of creaking floorboards on the landing comes just before they get fed in the morning, they’ll sit at the bottom of the stairs drooling all night when it’s windy and the house is shifting a little on its foundations.
And, I’ve found, they may get it into their head that if they spin three times clockwise and twice in the opposite direction as you’re coming down in the morning, there’s more chance that there will be chicken scraps in their breakfast.
That’s a tough one to break as is begging to go out the back door when you’ve tried to let them out the front because the weather might be better the one side than the other.
Anyway, that’s enough for the moment. On to the news:
PUBS & RESTAURANTS:
• The FT quotes broker research suggesting that the number of breweries in the UK has been growing at 17% compound for the last 8yrs. There are now some 2,250 brewers operating in the UK.
• The market for low and no alcohol drinks is showing signs of real growth as well-known breweries such as Heineken and craft ale brands including BrewDog respond to consumers’ desire for healthier lifestyles. An estimated 14% of Brits already drink alcohol free beer, wine or cider and low/no alcohol beer sales rose 28% to £43m last year, per Pragma Consulting.
• Deliveroo will reach 400 virtual restaurants by the end of September, per MCA.
• The British Beer and Pub Association (BBPA) has criticised the ‘burden and cost of proposed calorie labelling’ on pubs run as small businesses. Brigid Simmonds commented: ‘Seasonal menus and locally sourced meals which change frequently and depend on the availability of key ingredients make calorie labelling challenging. This could also mean that calorie labelling will result in significantly reduced choice for the consumer.’
• Innocent has announced a 22% increase in revenues driven by international sales growth and new product ranges. Group turnover for Fresh Trading rose to £370m, driven by 43% and 21% sales growth in France and Germany respectively.
• UK businesses have been exporting record levels of food and drink, with the US, China and Hong Kong proving to be the top export destinations, per Pragma Consulting. Popular exports include vegetables, ice cream, chocolate, strawberries and whisky. This export increase has also been helped by the devaluation of the pound down against the Euro and the US dollar over July.
• Per MA, a report by investment bank Berenberg claims the price of a pint is set to increase after hot weather affected barley harvests this summer. UK barley prices as of the end of August 2018 were up by about 37% year on year, having already been up about 12% year on year in 2017.
• Starbucks partners with Uber Eats to expand its delivery program involving more than 100 stores in Miami.
• Stonegate Pub Company rolls out a new Level Four management training programme for its chefs and kitchen managers, hoping to create leaders and improve staff retention rates.
• The WTSA reports domestic sales of UK gin were up 38% yoy to £1.6bn in the year ending 16 June. Total sales of UK gin including exports were £2.2bn in the same period.
• American wine exports to China increased 14% in H1 2018 to $38.4m, despite the increased import tariffs the Chinese government has placed upon them.
• Coca-Cola is reportedly in talks with Cannabis producer Aurora Cannabis, as the group looks into marijuana-infused beverages. Coca-Cola stated: ‘Along with many others in the beverage industry, we are closely watching the growth of non-psychoactive cannabidiol as an ingredient in functional wellness beverages around the world’.
• High fixed costs in the restaurant industry are to blame for the wave of closures that has claimed sites from operators including Jamie’s Italian, Prezzo, Byron, and Carluccio’s, per The Telegraph. The success of good operators also brought with them others looking to make money, leading to excess supply at a time when pubs too were bulking up their food propositions.
• The Wetherby Whaler Group has expanded its portfolio of restaurants and takeaways with the acquisition of The Empire, in Wakefield, to six sites across Yorkshire. Caroline Murphy, director of Wetherby Whaler, said: ‘The smooth purchase of The Empire complements our existing portfolio of restaurants and takeaways, and strengthens our position in Wakefield and across Yorkshire.’
• Greene King has appointed former Pizza Hut chief operating officer, Wayne Shurvinton, as managing director for its Pub Partners tenanted and leased division. The outgoing John Forrest will leave to take up a new position in the healthcare sector.
• DP Poland has reported H1 numbers showing a 38% increase in system sales to 37m PLN and a 39% increase in corporate store EBITDA. The loss before taxation is £1.11m compared to £1.08m last year. The group was impacted by hot weather but remains confident in its continued expansion. LfL sales ‘softened’ in the hot weather of July and August at +6% and +1% respectively, albeit against strong comps.
HOLIDAYS & LEISURE TRAVEL
• Tui group has further expanded its excursions, tours and activities operations after acquiring the Italian technology start-up Musement.
• The US investment firm, Capital Group Companies, has taken a 5.2% stake in Thomas Cook, after the tour operator’s shares have fallen 36% in the last year.
• A Japanese internet entrepreneur, billionaire Yusaka Maezawa, is to be the first ‘space tourist’ to fly round the moon. The ex punk band drummer made his money in online fashion with his company Zozo and is the 18th richest person in Japan with a fortune of $3bn, according to Forbes magazine.
• Uber is in talks to buy Dubai-based rival Careem Networks FZ for $2-2.5bn.
• Figures from the Office of Rail and Road (ORR) show the worst punctuality on Britain’s railways for 12 years, due in part to severe weather and new timetable disruption. The body representing the rail industry said it was ‘investing billions’ but it was time for ‘root and branch reform’.
• Escape Hunt, the world’s largest operator of escape games venues, has reported H1 numbers to end-June saying that revenues increased to £800k from £193k last year with an adjusted EBITDA loss of £1.4m (2017: loss £139k) and a loss per share of 18.6p.
• Escape Hunt opened its first three UK owner-operated sites in March and intends to have nine operating by the end of the year. The group recently secured a 5yr exclusive agreement to market Dr Who themed rooms worldwide. The group had net cash of £6.4m at its H1 end compared with £10.6m at end-December.
• ESC chairman Richard Rose says the group has made ‘very significant strides’. Mr Rose says ‘there have been challenges along the way’ but ‘the objective is to provide a strong platform to differentiate the group from its competitors and to establish Escape Hunt as the premier brand in the rapidly evolving escape room sector.’
• ESC says ‘we have had challenges to overcome, both in obtaining planning permission for our new UK sites as well as putting together a reliable supply chain for games production’ but says ‘we have now made good progress in both securing sites and finding production partners.’
• The publicity surrounding Dr Who has been helpful and ESC says it ‘is beginning to reap the rewards of the repositioning of the business.’ It says ‘management will concentrate on larger leisure/property partners for new franchising opportunities. They have the financial resources to develop multiple sites and support the production of more valuable games and higher marketing budgets.’
• Overall, ESC says ‘plans are now being executed at pace. Given the evidence of the newly opened sites, the Group is reassured that the resultant format is producing the desired customer response and financial result and I am confident that Escape Hunt is building the foundations for a successful, high quality business.’
• Gfinity, the London based esports solutions provider has announced that it will hand over $2.7m in deferred considerations to the vendors of CEVO as a result of CEVO achieving certain revenue targets in 2017.
FINANCE & ECONOMICS:
• President Donald Trump has stepped up his trade war with China by imposing tariffs on a further round of $200bn of imports. The tax will kick in at 10% on Monday before rising to 25% in January next year.
• Sterling up vs dollar at $1.3152 and slightly up vs Euro at €1.1249
• Oil price down at $77.57
• UK 10yr gilt yield up 1bp at 1.54%
• World markets. All down yesterday with Far East mixed in Tuesday trade.
• Brexit etc.:
o Mrs May says it’s her deal or no deal. Lib Dems & People’s Vote supporters say there is another way. The PM could come back from Salzburg waving a piece of paper but, ultimately, it’s what’s in it that counts.
o IMF gives bleak assessment of UK’s economic prospects in the event of no-deal. Says the UK will shrink even if a deal is struck. No evidence either way but Brexit supporters seem to disagree.
o Jaguar Land Rover has put its staff on a 3-day week until Christmas. Birmingham MP Jack Dromey blames ‘Brexit chaos’.
o Guardian quotes EU sources as saying Britain will stare into the abyss of a no-deal Brexit before caving in to its demands re the Irish border, contributions to the budget etc. Brexit supporters say the EU is more likely to blink first.
PRIOR DAYS LATER TWEETS:
• Later tweets: Peach Aug Tracker shows UK LfLs +0.6% v inflation of 2.3%. JDW says it needs 4% to stand still in terms of profits
• Tracker. Restaurants +1.4% with pubs up 0.2%. London outperformed the UK as a whole with LfL sales +1.5%.
• Restaurant Group may up pub exposure as reported in discussions with Peach Pub Co re a possible acquisition.
• BCC cuts 2018 UK growth forecast for from 1.3% to 1.1%. Potential EU give on Irish border raises Brexit deal optimism
• Markit household tracker at 45.9. Still at relative highs. Job security deteriorated. Is ‘2nd lowest level of pessimism…since EU referendum.’
• Pragma says 0% & low alcohol beer market grew 28% last year. Albeit still relatively small but industry majors now investing in this area
START THE DAY WITH A SONG:
Yesterday’s song was Disorder by Joy Division. Today, who sang:
Birthdays was the worst days,
Now we sip Champagne when we thirsty
Uh, damn right, I like the life I live
Cause I went from negative to positive
RETAIL NEWS WITH NICK BUBB:
• Nick is taking a well-earned break.