Langton Capital – 2019-08-02 – PREMIUM – YUM, McDonald’s, Manchester Night-Time Economy, and Other:
YUM, McDonald’s, Manchester Night-Time Economy, and Other:
PREMIUM EMAIL – PLEASE DO NOT FORWARD:
A DAY IN THE LIFE:
Salzburg’s an interesting place but, liberally supplied with visitors by the numerous Mozart and the Sound of Music tour busses (and the two do not mix), it was pretty packed.
And that can be a bit of a problem because, if you don’t like fighting for parking spaces, shuffling, morose-looking crowds, and often people, small dogs and particularly people with small dogs, then it may not be the spot for you but it was nonetheless pretty and it broke the journey between Munich and Vienna.
Or rather Baden bei Wien, a spa town 20 odd miles south of the Habsburg capital, which looks to be a pretty pleasant spot.
And it seems to know it as, judging by the sumptuous villas, the flash cars, the packed commuter station into Vienna and the upmarket shops, it’s where the Austrian Home Counties set hang out.
Meaning that, with my rolled up long trousers, sandals with socks, knotted handkerchief on my head and silly grin, I expect to fit right in.
Anyway, as mentioned, elements of Langton are on holiday this week and next. We’ll grace Vienna with our presence and pop into Slovakia over the weekend before heading south again. The email could be a little bit shorter than usual. On to the news:
GENERAL NEWS – PUBS & RESTAURANTS:
Yum! Brands has reported system sales up 10% with LfL sales increasing 5% during Q2 2019. Greg Creed, CEO, said: ‘Second-quarter results maintained early year momentum and helped us to exceed our already high expectations for a strong first half of 2019. I’m especially pleased to report that we delivered 10% system sales growth in the quarter, supported by broad based strength at KFC International and Taco Bell’.
Yum Brands has reported that it will close 500 of its underperforming Pizza Hut restaurants in the US. President and chief operating and finacnial officer David Gibbs commented: ‘We are leaning in to accelerate the transition of our Pizza Hut U.S. asset base to truly modern delivery carryout assets. This will ultimately strengthen the Pizza Hut business in the U.S. and set it up for faster long-term growth’.
A survey conducted by Nationwide Building Society found that 33% of primary school children have never been inside a butcher or greengrocer, painting a bleak picture for the future of Britain’s high street.
A quick scroll through the discount aggregator websites will show you that prezzo is offer 2 for 1 mains or 20% of your food bill. Joining Prezzo, Bella Italia is offering 40% off mains, with Cafe Rougue going for 30% off.
London has seen its first ‘McDonald’s To Go’ open up on Fleet Street. The site will have no in-store seating and will focus purely on takeaways. Henry Trickey, senior vice president for development and IT at McDonald’s, said: ‘In Fleet Street, where city workers are looking for something quick to grab and go, it makes sense to test a smaller format. We know that one size doesn’t fit all and that’s exactly why we are launching McDonald’s To Go — to allow us to trial different formats in different locations, depending on customer needs’.
The craft beer brewer and pub operator, BrewDog is searching for experienced franchisee operators as the group looks to expand its offering domestically and abroad.
The Greater Manchester Combined Authority has revealed plans to regenerate the city’s hospitality sector and night-time economy. CEO of the BBPA, Brigid Simmonds, said ‘With its ambitious strategy, Greater Manchester has set a high bar. We sincerely hope other local and regional authorities follow in its footsteps.’
UKHospitality also welcomes Manchester’s revitalisation plans, with CEO Kate Nicholls saying ‘The blueprint for the night time economy contains some very positive measures aimed at supporting late-night venues… Measures to encourage people to stay out late and facilitate their enjoyment of late-night hospitality are very positive.’
CGA reports beer is still the most popular drink in the US and the UK, accounting for 48% of drinks sold in the UK and 44% of drinks sold in the US. CGA drinks expert, Mark Jackson, said ‘Premiumisation of the beer category has outpaced volume declines to realise an increase in dollar and pound sales value. We are seeing world lager in most growth in GB and import and domestic super premium leading the way in America.’
CGA reports the average British consumer goes out to eat 63 times a year, and goes out for a drink 85 times a year. The report suggests consumers spend most when they’re on a date – £22.50 per head.
Denny’s Corp. reports Q2 domestic same store sales up 3.8%, with same-store sales for company restaurants up 4.4% and same-store sales for franchise restaurants up 3.7%.
Hawthorn Leisure launches a new Partner training programme, named ‘Seven Steps to Sales Success’, designed to ensure all new publicans get the best possible training to set them up for sales success.
Majestic Wine has announced it has entered into an agreement to sell its retail divisions for c.£100m.
HOLIDAYS & LEISURE TRAVEL:
Parkdean Resorts appoints former easyjet group strategy and commercial director Catherine Lynn as Chief Customer Officer. The newly created position has responsibility for marketing, digital, insight, commercial and revenue.
Accor reports H1 operating profit up 5.1% driven by restructuring efforts and robust demand in Europe, South America and the Middle East, with LFL RevPAR up 2.9%. The company now expects EBITDA to rise to between € 820-850m in 2019, from €712m in 2018.
STR has announced US hotels saw occupancy decline 1% to 77.5% with ADR falling 0.5% to $136 and RevPAR down 1.6% to $105.43, during the week of 21-27 July.
Two package holiday firms have entered into administration, affecting over 50,000 travellers. Malvern Group and Super Break have both ceased trading, the former has said that it ‘anticipates’ its booking will remain secure, however, the latter has stated that customers currently on holiday with them may have to pay again.
More bad news from Goals. Goals Soccer reports that it has been the victim of ‘improper behaviour within the Company. This has involved a number of individuals for a period since at least 2010.’
The company says ‘due to these initial findings, there is material uncertainty in relation to the historic financial statements published by the Company. Work on the Company’s full-year 2018 audit has therefore been suspended until further clarification on the historic financial statements has been obtained.’
Goals says the directors do not believe they will have FY18 accounts prepared by 30 September 2019 and therefore tis shares will not be relisted.
Goals says ‘the Directors do not now believe this timeframe for the audit is achievable and, coupled with the findings above, no longer expect the ordinary shares in the Company to resume trading. The listing of the Company’s ordinary shares on AIM is therefore expected to cease and cancellation will be effective from 30 September 2019.’
Goals says there have been no other ‘material developments in the ongoing dialogue with HMRC in establishing a timetable for resolving any misdeclaration of VAT and in establishing a final value of money owed.’
Re current trading, the company says ‘year-to-date sales across the 45 sites in the UK on a gross like-for-like basis are up +11.5%. The Company’s US gross like-for-like sales are up +14.5%.’ it will make further updates ‘as appropriate’.
The Economic Times reports that Amazon is in exploratory talks to acquire a 26% stake in India’s largest brick-and-mortar retailer – Reliance Industries’ retail unit. Amazon declined to comment, while Reliance said it will make any disclosures to stock exchanges as and when necessary.
Spotify reports premium subscribers up 30% yoy to 108m, but missed analysts’ expectation of 108.5m. Q2 revenue rose to rose to €1.50bn, with good performance in gross margins and user engagement during the quarter.
START THE DAY WITH A SONG:
Yesterday’s song was Natural Woman by Aretha Franklin. Today, who sang:
“Close my eyes, she’s somehow closer now,
Softly smile, I know she must be kind
When I look in her eyes”
RETAIL WITH NICK BUBB:
Pets at Home: The Pets share price was firm yesterday, as if today’s Q1 update (for the 16 weeks to July 18th) would be good, and it certainly does not disappoint, with 8.0% LFL revenue growth. And on the back of that strong start to the year, the Board says “we now expect underlying profit for the year to be slightly above current market expectations” (the current consensus is for FY20 underlying PBT of £85m).
Majestic Wine: It has been rumoured for some time, eg by the well-informed Sky Business News, that the US investment fund Fortress was close to buying out the Retail and Commercial side of Majestic Wine and the company has indeed confirmed today that an agreement has been signed, for the expected price of about £100m (of which £78m will be the initial cash consideration), subject to shareholder approval. That will leave the re-named company focused on its Naked Wines Online business.
News Flow Next Week: As we move on into August, we get the BRC-KPMG Retail Sales survey for July first thing on Tuesday, but there is not much company news scheduled, although the Pendragon interims should be out at some point and the Majestic Wine AGM is on Thursday. Friday is, interestingly, the anniversary of the Sports Direct acquisition of House of Fraser out of administration last year.
BDO High Street Sales Tracker: The weather last week was pretty similar to a year ago, in terms of a heatwave and then thunderstorms and today’s BDO High Street Sales Tracker for medium-sized Non-Food chains reports decent progress in spending, for w/e Sunday July 28th. BDO Fashion sales were up by 4.4% LFL (including Online), the eleventh consecutive week of growth…And total BDO LFL sales (including Homewares and Lifestyle sales) were up by 3.0% last week (down by 2.2% in Store sales and up by 17.8% in Online sales).