Langton Capital – 2018-09-19 – Confidence & Brexit, low strength drinks, delivery & other:
Confidence & Brexit, low strength drinks, delivery & other:
A DAY IN THE LIFE:
So, here’s a couple of statements followed by a question for you: There are over 200 roads bridges and tunnels that will get you across (or under) the Thames. The Amazon is some 20x longer. How many bridges does it have? Answer at the foot of this section.
Anyway, it’s certainly autumn out there and, as has been reported on Radio Four and elsewhere, the UK’s garden spiders are finding their way back into their respective houses.
And, having gorged all summer on fat flies and the like, they’re bigger and more visible than usual and, though I don’t see a spider as any creepier than a woodlouse or an earwig, they are a cause of concern for many.
Hence, it’s with some consternation that I must register the fact that the dog, though he will eat virtually anything with calories in it, refuses to eat spiders.
Not that he’s scared of them, of course. Rather he quite likes the fuss that they cause and, if two thirds of the family jump onto settees every time they see one, there must be a chance that they’ll drop some food.
Amazon = Along its c7,000km length, there is not a single bridge across the Amazon. That there are no tunnels almost goes without saying. It starts in the Andes, passes through the jungle and then, by the time it gets somewhere sensible, it’s simply too darned wide to make it worthwhile. It discharges 3,000 times as much water per hour as does the Thames. On to the news:
CGA / FOURTH SECTOR CONFIDENCE POLL:
• CGA / Fourth Hospitality poll suggests that ‘Brexit anxiety [is] hitting confidence of pub, bar and restaurant bosses.’ Says two thirds of pub bosses support a second referendum
• Tim Martin at JDW presumably excepted, CGA / Fourth says ‘pessimism about prospects for the eating and drinking out market has increased in last quarter’ adding ‘concerns over the impact of Brexit is driving a fall in confidence among the leaders of Britain’s eating and drinking-out sector, with a majority backing a ‘soft Brexit’ outcome, while more than two thirds support a second referendum.’
• CGA / Fourth reports ‘just over a third (36%) of the bosses of pub, bar and restaurant groups are optimistic about prospects for the market over the next 12 months – a drop of 11 percentage points since the last poll of leaders in May.’ Some 67% remain upbeat about their own businesses, down from 75% last quarter.
• Some 71% of respondents said that the 2016 Brexit vote had already had a negative effect on business. JDW and some others have reported strong trading, however, and say that they believe food prices will fall if the UK exits the EU without a deal. Dr Liam Fox, whose experience in the private sector is admittedly limited, says that Brexit is a ‘golden opportunity’ for the UK and that it could be the free-trading nation that it was in the past.
• Around 62% of bosses favour a Brexit softer than Chequers with less tha 10% favouring any other outcome and 69% backing a second refendum. A softer Brexit would presumably ensure that going back in when the current generation of politicians have moved on, was easier.
• Bosses say that food and drink costs have risen and that access to labour is less easy since the June 2016 vote. Around 48% say that consumer confidence has been negatively impacted with covers under pressure.
• CGA reports the survey ‘is the clearest indicator yet of the dramatic impact of Brexit on the hospitality sector. It reveals the huge disruption that the EU Referendum has already caused to the costs and confidence of businesses, and the further impacts it is likely to have on staff recruitment and retention, especially in London.’
• CGA says a ‘large majority of operators are now pinning their hopes on a ‘soft’ Brexit, or even a second Referendum. But while many businesses are moving to mitigate the effects of Britain’s departure from the EU, some are, by their own admission, still not ready for it.’
• Fourth comments ‘it is clear to see that sustained Brexit uncertainty has impacted confidence among industry leaders. With rising costs – including those associated with employment – a shrinking talent pool and the sector’s heavy reliance on EU workers, the government needs to navigate the complex process of leaving the EU with an approach that supports hospitality employers.’
PUBS & RESTAURANTS:
• Honest Burger, the 28-strong better burger group, is opening a new site in Marylebone, reports the MCA.
• Luxury non-alcoholic distiller Seedlip, backed by Diageo, will now be sold in Waitrose stores.
• KERB, the street food market operator, is teaming up with WeWork launching a meatless market in Devonshire Square, London.
• The CEO of the BII, Mike Clist says of the government’s consultation on calorie labelling: ‘The BII are concerned that Government is considering yet more red tape, thus increasing the costs of running pubs that are already under severe pressure from the impact of business rates, sugar tax, auto enrolment pensions, beer duty and many other areas of legislation that add costs to our members’ businesses.’
• Pizza Express’ acquisition of Firezza in early 2016 was supposed to catapult itself into the pizza delivery market, but the operator made the surprise decision to offload its new business the next year, and Companies House figures show losses associated with the disposal came to £11.3m. In the period up to the disposal, Firezza had generated a turnover of £7.1m but racked up pre-tax losses of £2.8m. Now, Pizza Express offers a delivery service from more than 200 of its restaurants on Deliveroo and Just Eat.
• Food to go’s popularity in forecourt convenience stores is dwindling as consumers opt for ‘top up and treat missions’, per Him. Him’s Winning in Forecourts 2018, which was based on 2,000 forecourt shopper interviews across 10 different fascias, reports the volume of shoppers highlighting food to go as their main reason for visiting a forecourt falling from 22% to 19%.
• The FT has reported that Starbucks’ European business paid an effective UK tax rate of just 2.8 per cent in the year to the end of October 2017. It handed over some $5.9m of tax in the year. This admittedly in addition to the VAT which, strictly speaking, was paid by the group’s customers rather than by the group itself.
• Chinese restaurant chain Haidilao Hotpot raised around $1bn on its IPO after pricing shares at the top end of the prospective range on the Hong Kong stock exchange. The issue values the company at about $12bn.
• North Yorkshire-based The Black Sheep Brewery has swung back to profit, with a 3.3% rise in turnover to £18.6m generating an operating profit of £260,000 for the year to 31 March 2018 (vs. a loss of £437k in 2017). Paul Theakston, who founded The Black Sheep Brewery in 1992, has officially retired from the board. Rob Theakston said of the results: ‘Rob Theakston, managing director of The Black Sheep Brewery, said: “This has been another year of progress for Black Sheep as we demonstrated our ability to adapt to the challenging market and trading conditions to deliver positive results and an award-winning year.’
• The BBPA ‘broadly welcomes’ the publication of the Migration Advisory COmmittee’s (MAC) report on the impact of EEA migration in the UK. CEO Brigid Simmonds commented: ‘We broadly welcome the MAC report and the evidence it provides that migrant workers play an important role in the UK economy, without having a major effect on the employment of UK workers. Increased productivity is vital to the economy and the MAC report acknowledges this, as does the Government’s Industrial Strategy. With this in mind, we’d urge the Government to support the proposed Tourism Sector Deal and its emphasis on skills, which the BBPA is prepared to back with financial contributions if the Government supports it.’
• Kopparberg will start manufacturing its ciders in Britain for the first time in a bid to reduce the impact of Brexit and could increase this capacity in line with customer demand.
• Today, Tesco is opening its first Jack’s store — a no-frills discount brand to challenge the rise in market share enjoyed by Aldi and Lidl since the financial crisis. The new retail format’s name is a nod to Tesco’s founder, Jack Cohen. Tesco is expected to open 60 stores in the coming months, with many of them replacing existing convenience stores in city centres.
• Dominic Chappell says he went ‘above and beyond’ and ‘genuinely’ tried to help an investigation by the pensions watchdog following the collapse of BHS.
HOLIDAYS & LEISURE TRAVEL
• Tests carried out in the UK on a British couple who died while on a Thomas Cook holiday in Egypt have reportedly been unable to establish the cause of their deaths.
• Staycity will open a new 212-apartment aparthotel in Liverpool’s Corn Exchange on 19 October. Staycity Group CEO Tom Walsh said ‘I’m particularly pleased to be opening in such a vibrant, busy area of this exciting city, which will be perfect for both our leisure and business visitors.’
• NH hotel Group has announced it will open a London nhow hotel in 2019, following hotels in Berlin, Milan and Rotterdam.
• Unite union reports a pay deal has been reached between ground staff at Luton airport and Menzies Aviation which will see the typical baggage handlers’ annual pay increase by around £1,670 by January 2019.
• Eurostar staff are set to strike for 48 hours between 30 September and 1 October in a dispute over working conditions at the international terminal in St Pancras.
FINANCE & ECONOMICS:
• Sterling down vs dollar at $1.3149 but up vs Euro at €1.1261
• Oil up a dollar and a half at $78.99
• UK 10yr gilt yield up 3bps at 1.57%
• World markets: All up yesterday bar the UK. Far East up in Wednesday trading.
• Brexit etc.:
o BBC reports some Brexit campaigners going for free trade and free movement of people with the US instead of with the EU
o The Migration Advisory Committee has called for limits on immigration of skilled workers from outside the EU to be scrapped
o BMW will close down its Mini factory outside Oxford for a month after Brexit. Its summer maintenance closure has effectively been brought forward
o Honda has warned that no-deal Brexit will cost his company ‘tens of millions of pounds’. Honda said ‘in terms of administration, we’d probably be looking at something like sixty odd thousand additional bits of documentation we would have to provide to get product to and from Europe.’
PRIOR DAYS LATER TWEETS:
• Later tweets: Evolutionary hotspots in news today: Burst of new craft brewers, low & no alcohol drinks, dark kitchens, delivery (even coffee) etc.
• DPP good on World Cup but impacted by hot weather. Comps in July & Aug +6% and +1% restectively.
• ESC says expansion been challenging but now sorted. First Dr Who rooms from December. Will have 9 UK sites by year end
• Guardian quotes EU sources as saying Britain will stare into the abyss of a no-deal Brexit before caving in. Brexit supporters disagree
START THE DAY WITH A SONG:
Yesterday’s song was Juicy by Notorious BIG. Today, perhaps feeling slightly less exuberant, who sang:
After my picture fades and darkness has,
Turned to gray
Watching through windows–you’re wondering
If I’m OK
RETAIL NEWS WITH NICK BUBB:
• Nick is taking a well-earned break.