Langton Capital – 2020-07-17 – PREMIUM EMAIL – Social media, Tracker, rents, Pizza Express, Azzurri, Heineken etc.:
Social media, Tracker, rents, Pizza Express, Azzurri, Heineken etc.:
PREMIUM EMAIL – PLEASE DO NOT FORWARD:
A DAY IN THE LIFE:
In common with many pet owners, we have various dog bowls around the garden to keep the mutt watered.
And, whilst I wouldn’t want to drink out of them myself, they are kept clean relative to the mud around them but the dog, when he gets a chance, he seems to want to drink from almost any receptacle other than the ones provided.
This because the aim seems to be to ingest as many dead insects, brown leaves and as much general muck as possible as he operates on the simple principle that it’s better to get stuff down his gullet and let his stomach decide.
However, though his belly and points south do make unpleasant rumbling noises and worse for hours thereafter, he seems generally happy suggesting that there’s something to be said for the simple life.
Anyway, it’s time to wake up and smell the caffeoylquinic, feruloylquinic and coumaroylquinic acids in the morning.
We were absent on Twitter yesterday due to a combination of lack of manpower, inconsiderate demands from the VAT man for information and general tardiness and a reluctance to read stuff in brown envelopes on our part.
Still, follow us on Twitter more usually at @brumbymark and let’s move on to the news:
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BOOK REVIEWS: SHAMING AND THE ROLE OF SOCIAL MEDIA: 17 July 2020:
1. JON RONSON: SO, YOU’VE BEEN PUBLICLY SHAMED: 2015: An investigation into the widespread demands for apologies, public mea culpas etc.
2. RICHARD SEYMOUR: THE TWITTERING MACHINE: 2019: How social media has driven change. Not all for the better.
• People have always been attracted to a pile-on. The offer of anonymity makes this even more attractive / addictive etc.
• Witch-burning remains popular and, where deemed ‘justifiable’, giving a third party a good kicking is cathartic. Not pleasant but not untrue.
• Ronson runs through a number of examples, e.g. Justine Sacco, who, through either bad luck or bad judgement have found themselves on the wrong end of an online punishment beating
• Ronson says ‘you have no rights when accused on the Internet.’
• You may or may not have said or done what you’re accused of. That’s not the point. The beating is the point.
Crowd behaviour and shaming frenzies:
• There can be ‘shaming frenzies.’ You can almost hear the ‘burn ‘em’ cry from the back of the crowd.
• Crowd behaviour is often, indeed almost always, worse than that of the individuals that make it up. See earlier comments on Gustave le Bon’s 1895 work The Crowd
• Public shaming is spontaneous and often contagious. Earnest demands for outrageous punishments are common.
• Social justice warriors can hardly restrain their indignation.
• Ronson says we can be shamed by things that seem inconsequential to others. Detractors may sometimes have to try very hard to take offence – and then try harder still to whip up others
• Reputation management companies have sprung up. Often in, guess where, America.
• They can’t take down good news but they can flood it out with good (or inconsequential) news such that the controversial Google stories are relegated to the Outer Mongolia of searches, page two.
• Boris Johnson (or Dominic Cummings) may or may not have had this in mind when he said his hobby was painting buses and thus ensured that Google searches that would otherwise have pointed to misleading NHS numbers on the side of a bus were swamped by those about this new-found past-time
• Scrubbing the internet is expensive and there is no ‘cure’ for bad PR and no vaccine against the haters (at least at the time of writing)
• Ronson says the dividing line between hell & redemption is a fine one.
The Twittering Machine:
• Social media has given everyone a voice. This is a) wonderful and b) deeply worrying.
• The Twittering Machine (encompassing Twitter, Facebook, Instagram etc), where people are addicted to likes and retweets, rewards cleverness & wit but also sadism & spite.
• The algorithms that ‘know us’ are not our friends. They are designed to promote addiction. ‘Intermittent rewards’ have long been used to keep addicts hooked. The big win on the gaming machine, the one last wave for the surfer etc
• They can lead to a dark and intense place. Best to watch kittens with balls of wool unless you want the ‘rhythm to end up showing you some pretty disturbing stuff
The home of outrage (real, fake or collective) of lynch mobs & show trials.
• Swarms can descend into lynch mobs. Trolls say ‘none of us are as cruel as all of us’. There are some seriously unhinged people out there. They say: ‘your tears are delicious but they are not enough’.
• The Twittering machine is fed by narcissisms. Victims of public online beatings often thrust themselves forward by their craving for likes, controversy etc. He says ritual beatings are ‘sanctioned by virtue’
Truth less important than titillation:
• Social media sells attention to its advertisers. It wants news to be addictive and sticky rather than necessarily correct
• There is no editorial function. Social media does not research the news. It splurges out the most salacious of what is already available
• Everyone is close to everyone else and ‘celebrities’ may foster a ‘contrived intimacy’ to stoke their careers.
Trolls and fake news:
• Trolls have a hive mind. But they may turn on their own. The line between a vigilante and a troll is a thin one
• Trolls ‘monster’ people and foster outrage. They shame people. Donald Trump is deemed a ‘trolling pachyderm’. Some estimates say he, Trump, is worth $2.5bn on Twitter’s market cap.
• The Dark Right is very active here. Some want to ‘create chaos for glory’.
• Some trolls will SWAP people. That is, call in armed police on a false errand in the hope that somebody will be hurt.
• Fake news is a big deal. Social media has no editorial function and it can lead to violence. There is occasional paranoid vigilantism e.g. armed raids on restaurants in the US to save children kidnapped by Hillary Clinton or attacks on sites thought to harbour UFO survivors.
• In the US in 2016, 44% of US adults got their news from Facebook – and there is virtually no fact checking that this is right. There is no journalism, just media.
• The truth value of the news may be much lower than its economic value to Twitter or Facebook. Indeed the truth value (my teacher is an alien) could be negative.
Silos and canalisation:
• Social media junkies can find themselves in echo chambers of an algorithm’s making. They can find themselves in dangerous company. Extremists egg others on for the lolz.
• This is leading to theories that we are in a post truth or post democracy era.
• This may be giving the Russians a buzz.
• People are offered the ‘red pill’. They are given an outlet for their anger. Nothing is their fault and they may crash a van into a crowd, wield a knife at strangers.
• Misery is weaponised. Eyeballs on line are ‘drawn to drama’.
• There is no external braking mechanism. We are at the mercy of the trade-off Mr Zuckerberg and his peers might make between the public good or the truth on the one hand, and profits on the other. What could go wrong?
• How trading levels may evolve from their current c60% of normal (for open units) and 0% of normal for shuttered ones.
• Feedback welcome.
• Also, are you passing the VAT cut on to consumers? Anonymised comments, depending on whether we get any feedback, on Monday.
PUB & RESTAURANT NEWS:
Covid – the new (ab)normal:
• Please let us know if you are passing on the VAT cut to customers. Anonymised comments, depending on whether we get any feedback, on Monday.
• Coffer Peach Tracker.
• The latest Coffer Peach Business Tracker, covering the week from 6 July to last Sunday, suggests that managed sites that were open recorded LfL sales down some 39.8% on the same week last year. Stating the obvious but closed units will be down 100%. This will clearly drag estates that are only partially open, down.
• The Tracker says that 55% of the units owned by the contributors of data were open for eating and drinking inside, up from the 36% trading on the first weekend restrictions were lifted.
• The momentum, to the extent that there is any after only a few days, is upwards. The first weekend was down 44.5% but the first full week from the Monday was down a lesser 39.8%. Pubs, bars and restaurants performed broadly in line with each other. Pubs were down 39.3%, bars were down by 42.9% and restaurants were down by 40.0%.
• As regards the number of units re-opened, more pubs than restaurants are now trading at 70% against only 17% of restaurants. The former tend to have more outside spacer than the latter but restaurants should benefit from the cheap meal deals being offered (by the taxpayer) next month. The Tracker says that 42% of bars are open.
• CGA says the UK, at 40% down, is better than some comparable overseas markets were at this early stage of re-opening. It says ‘the sector still has a long way to go, but this sets the benchmark against which the speed of recovery will be judged.’ CGA adds ‘operators told us that most would be taking a phased approach to reopening and we have seen this in the figures. The 70% of managed pubs in the first full week compares to just 42% over the first weekend, and although restaurants have been taking an even more cautious approach we know more will be open next week.’
• The outlook for rents:
• Property agent Colliers has reported its belief that the Covid-19 pandemic will reduce casual dining spend in the UK by more than £20bn this year. It says the crisis ‘is triggering a fundamental restructuring of the sector and the property market which serves it.’
• Colliers says ‘operators have found themselves with overheads that are too high, margins which are too low and a target market which is nervous about a return to eating out on the scale which prevailed prior to the pandemic.’ This is certainly the case in the short term. Colliers says ‘the Government’s ‘Eat to Help Out’ scheme and VAT reductions are timely measured but to restore trading viability, support existing operators and woo new offers into vacant space, rents must inevitably fall and the sector has to target new and sustainable profit margins.’
• Colliers reiterates ‘as a consequence, we expect there to be a further significant reduction in rental values, and an increase in vacancy rates, together with a structural change in the way that casual dining property leases are structured.’
• Spoiled beer.
• The BBPA has reminded publicans to ensure they have submitted applications to destroy their spoilt beer before the end of July, so they avoid charges from water companies.
• SIBA has expressed disappointment at the scale of proposals to reform liquor licensing laws in Northern Ireland saying ‘small independent brewers in Northern Ireland want the freedom to sell their local beers directly to the public, to open taprooms and sell online. Sadly, today’s proposals fall far short of what small breweries need and mean they can’t meet the customer demand for a greater variety of locally produced beer.’
• The Independent Family Brewers of Britain says that its members have extended more than £20m in financial support to their pub tenants. Family brewer Hall & Woodhouse is among a number to cancel rent throughout the enforced closure.
• Reuters has conducted interviews with operators who have expressed concerns that the dining out habits of UK consumers may have been changed by the Covid-19 lockdown.
• Hong Kong has banned dine-in services at restaurants between 6pm and 5am.
• Sky reports that around 75 Pizza Express restaurants could be permanently closed under plans being drawn up to enact a CVA. The company has c470 outlets in the UK and employs c8,000 people in this country. A thousand jobs could be lost. Current owner, Hony Capital, bought the company in 2014.
• French chain Bistrot Pierre has been sold in a pre-pack administration. Six of its units are to close with 19 transferring to the new owner. KPMG has undertaken the transaction.
• Various sources also suggest that Azzurri Group, owner of the ASK and Zizzi brands of Italian restaurants, could also announce a CVA, perhaps as early as today. This is likely to ‘tidy the company up’ ahead of a takeover deal. Perhaps 100 restaurants could shut. See Colliers’ comments on rents (above) in the light of such news.
• Heineken reports a €500m write-down to asset values and says it could make a loss for the year. The brewer reports net revenues down 16.4 per cent on an organic basis as beer sales were impacted by worldwide lockdowns and the closures of restaurants and bars.
• Domino’s Pizza Inc beat Wall Street estimates yesterday when it reported Q2 numbers. The company says that total revenue rose 13.4% to $920 million in the quarter ended 14 June with net income up 28.5% to $118.7 million. On a per share basis, the company earned $2.99, beating the estimate by 75 cents. International LfL sales were up by 1.3%.
• The ONS has reported that the number of people employed in the UK fell by 649,000 between March and June. It says, however, that the official number of people unemployed has not changed. That seems a bit odd. Presumably those 649,000 are not yet claiming the right sort of benefit to count as jobless.
• The headline rate of unemployment is unchanged at 3.9% between March and May.
• Analysts are reported to be looking at the number of hours worked (which will clearly correlate closely with wages paid and therefore spending power) and here there has been a sharp drop.
• Genting (see below) is announcing redundancies as is Buzz (used to be Gala Bingo). These companies (and Pizza Express above) are jumping the gun and forgoing the £1,000 per capital retention bonus that employers have been promised.
• The British Chambers of Commerce has said that 29% of UK employers plan to cut jobs in the next three months.
• The ONS has reported that average weekly earnings, excluding bonuses, grew at an annual rate of 0.7 per cent in the three months to May, or around zero in real terms.
• The NIESR says ‘pay growth in the private sector has fallen, but may flatten off for a time as workers return from furlough before weakening further in the second half of the year when unemployment is set to rise sharply.’
• Feedback. See also Coffer Peach Tracker above.
• ARC Inspirations’ CEO Martin Wolstencroft says last week’s revenues were down only 15% on the same week the year before. He says ‘the pattern emerging is people are staying closer to home, avoiding public transport resulting in our suburban sites being in great growth.’
• Wolstencroft says ‘trade in big City centre sites being affected due to offices not being open, no corporate bookings, big party/celebration/graduation bookings and restricting capacity/numbers.’ He adds that he is ‘seeing stronger growth in our wet sales compared to food showing that customers really missed going out for a pint/wine/cocktail and to be in a social space to relax and the return of diners has been slower.’
• Forward booking (with non-returnable deposits) has been a smart move. A number of operators have been hurt by no-shows.
• One operator is around 75% of last year, another 60% to 65%. These numbers are broadly in line with the Coffer Peach numbers with a better performance coming from operators with a community/suburban bias.
• Please feel free to drop us a line. We’re particularly interested in hearing just who is, and perhaps more importantly who is not, passing on the VAT cut as well as comments on trading levels, how much is due to competitors being shut etc.
• The Southbank Centre, Europe’s largest arts complex, says it may have to make two-thirds of its staff redundant due to the coronavirus crisis.
HOLIDAYS & LEISURE TRAVEL:
• STR reports that US hotels saw occupancy fall by 38% in the week to 11 July compared to last year with rates achieved down 27%. The resultant REVPAR is down by 55%.
• The US CDC has said that cruises cannot operate in US waters until the end of September at the earliest. The previous ‘No Sail Order’ had been due to expire on 24 July but industry body CLIA had already extended this on a voluntary basis until 15 September. CLIA says ‘as reflected in today’s announcement, Clia and its member lines remain aligned with the CDC in our commitment to public health and safety. We are also pleased that the CDC has announced its intention to issue a request for information about the industry’s resumption of passenger operations.’
• Genting Casinos has cautioned that some 1,642 employees in the UK are at risk of losing their jobs. The company is clearly not going to stick around for the retention bonus in January.
• Netflix has seen subscriber growth slow after the great rush to sign up that it saw as Covid-19 first hit global markets. The company added 10m new subscribers in the three months to end-July, down from the 16m that it had added in Q1.
FINANCE & ECONOMICS:
• See under The Consumer above for info on job losses and average earnings.
• Sterling higher at $1.2565 and €1.1035. Oil down a shade at $43.21. UK 10yr gilt yield down 4bps at 0.13%. World markets weaker yesterday with Far East mixed in Friday trade. London set to open up around 10pts as at 7am.
START THE DAY WITH A SONG:
The song has been furloughed. See you on the other side.
RETAIL WITH NICK BUBB:
• Today’s News: Today is the Homeserve AGM (at 10am in the HQ in sunny Walsall) and the company has issued a brief update beforehand, to flag that “HomeServe continues to expect to deliver a solid performance in FY21”, highlighting that membership renewal/cancellation trends have been unaffected by the pandemic and that “consumer demand for home improvements has recovered strongly across all businesses” (with Checkatrade.com having its largest ever number of consumer web visits in June at 2.76m, up nearly 60% on last year). The main news last night was that the key bosses of the embattled Boohoo had at last moved in to support the struggling share price yesterday, via the announcement at 3.42pm that Mahmud Kamani and Carol Kane had bought 7m shares between them at c214p. More modestly, AO.com has announced this morning that CEO and founder John Roberts has edged up his stake, by buying
• News Flow Next Week: A quieter week kicks off at c8am on Tuesday with the latest monthly Kantar/Nielsen grocery sales figures. There are a couple of AGM’s (Ted Baker on Tuesday and Kingfisher on Friday), but the only company results scheduled are the Howden interims on Thursday, although it is possible the hapless Frasers Group (aka Sports Direct) could get its act together and announce its finals and we are still waiting for the delayed McColl’s interims. The timing of the widely followed monthly GFK Consumer Confidence index is not as predictable as it used to be, but the latest edition could be out first thing on Friday, along with the ONS Retail Sales figures for June.
• BDO High Street Sales Tracker: The BDO High Street Sales Tracker today for medium-sized Non-Food chains flags that in w/e Sunday July 12th, BDO Fashion sales were down by c17% again (down 56% in Store sales and up 40% Online), but Total BDO LFL sales (including a handful of Homewares and Lifestyle retailers, as well as Fashion retailers) were down by only c6% (down c43% in Store sales, but up by c80% in Online sales).
• Trade Press: Drapers magazine is now monthly, but Retail Week magazine has been published today and the striking front cover is a close-up photo of “the business end” of a sewing machine, to illustrate the main feature article on “Fashion’s open dirty secret” (“Leicester sweat shop scandal rocks retailers”). The RW article flags that the problems in Leicester’s clothing factories go much deeper than just the link with Boohoo, but the Executive Editor has a column arguing that “Boohoo should cut ties with Leicester following revelations”. The main Editorial column looks at the help given to the hospitality industry in last week’s mini-Budget and thunders that “Retail has become the UK’s invisible industry”. RW also have a feature on the problems for the new Sainsbury CEO, Simon Roberts (“The triple threat facing Sainsbury’s new boss”), a profile of the new John Lewis boss Pippa Wicks, a