Langton Capital – 2020-08-26 – Byron, Pizza Express, JD Wetherspoon, footfall, cruise ships etc.:
Byron, Pizza Express, JD Wetherspoon, footfall, cruise ships etc.:
A DAY IN THE LIFE:
Half priced meals in Stamford Bridge for some of Team Langton yesterday.
Pub full at 1.30pm (albeit with many tables taken out of action) and ‘full since we opened and not taking any more bookings for the whole day now, we’re sold out.’
Menu prices showing no sign whatsoever of any reduction since VAT fell from 20% to 5% (on food & non-alcoholic drinks). In fact, they may have gone up, suggesting that gross profit percentage, on increased volume, is much improved.
But costs are up, and operators are only as good as their slowest moving part.
If service is poor or slow or surly or staff are making it plain that they think they’re working too hard, are a martyr to their customers, they won’t get the money through the till over the medium term.
On that point, we stopped for a coffee in Malton. Three lattes and a hot chocolate at £10.40 discounted to £5.20. We mentioned it made a big difference to the bill to the lady who took our money and she said, yes, daft isn’t it?
Bemused, we asked if she thought the government might extend it, to which the lady replied ‘I hope not, it’s just too much admin. I’m not the owner, I think we get the money quick but it’s too much work…’
There’s no pleasing some people. Still, we booked a meal for today in Robin Hood’s Bay. Top of the hill, Victoria Hotel, so we’ll give it another whirl. Can’t all be bad. On to the news:
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A COUPLE OF COMMENTS:
• Updates from administrators and CVA advisors – Byron & Pizza Express
• Consequences of ending EOTHO. See Premium Email
PUB & RESTAURANT NEWS:
Eat Out To Help Out:
• The EOTHO scheme was used 64m times in its first three weeks reports the UK Treasury. The scheme is said to be supporting nearly two million jobs. Sunak says ‘today’s figures continue to show that Brits are backing hospitality – with more than 64 million meals discounted so far, that’s equivalent to nearly every person in the country dining out to protect jobs. This scheme has reminded us how much we love to dine out, and in doing so, how this is helping to protect the jobs of nearly two million people who work in hospitality.’
• Open Table has reported that the number of customers at UK restaurants between Monday to Wednesday last week was 61% higher than the same week last year. Some 84,000 establishments are now signed up. The IFS has said that the scheme will only benefit those well-off enough to eat out. Anti-obesity campaigners have also criticised the deal.
• The Telegraph reports that chancellor Sunak has ‘zero appetite to extend ‘Eat Out to Help Out’ beyond August.’ There are many in the trade hoping that that is wrong. It is a relatively cheap fix at this stage in the game and a continuation would persuade operators who would otherwise re-close sites, not to do so.
• The Telegraph quotes David Page, chairman of Fulham Shore, as saying ‘I’ve been in restaurants for 40 years and never seen anything like it. Eat Out to Help Out immediately increased our restaurant customer numbers by over 50pc, thus enabling us to get all our staff back to work. In fact, we are now creating new jobs by hiring and training more people as fast as we can.’
• No official update from Chancellor Rishi Sunak as to whether EOTHO will be extended into September. Early betting 60:20:20 – expiry of scheme vs extension as it stands vs extension for o55s or some such grey-market tweak.
• A few commercial operators, relatively small operators at present, have already jumped the gun and said they will extend into September. Brindisa and Gaucho have indicated an extension amongst others.
• Sky reports ‘one of London’s biggest commercial landlords is to subsidise discounted meals beyond the Treasury’s ‘Eat Out to Help Out’ scheme in a bid to avoid a renewed slump in footfall.’
• It says central London property owner The Grosvenor Estate will announce today (Wednesday) that it is ‘reducing rents for direct tenants which continue to offer diners half-price meals until the end of September.’ Smart move.
• Sky says ‘Grosvenor’s offer is significant because it underlines anxiety among commercial landlords that the end of the summer season will lead to a renewed decline in footfall in parts of central London.’ As mentioned above, smart move.
• See EOTHO also in A Day in the Life above.
The new normal:
• S4Labour reports that weekly sales fell by 2.4% last week, largely due to a decline of 13% in drink sales. It says that food sales performed strongly, at up 5.4% on the previous week.
• S4Labour says ‘sites in London suffered a 7.7% week on week decline in sales, where site outside the capital fell just 1.7%.’ It adds that ‘like for likes were also down 8.2% on the same week last year. There was a dramatic difference between the performance of food and drink, with drinks sales sliding 24.4% on the same week last year and food sales up 17.5% on the same week last year.’
• S4L says the weather is likely to have played its part as it was hot last year and wet last week. S4L says ‘we would expect to see some decline in drink sales owing to this but are encouraged by the continued re emergence of the public eating out.’
• The Telegraph says calling the death of the office is a little premature. Though it does concede that the commercial property market ‘has been shaken to its core by the national lockdown and the explosive growth in online shopping.’
• Road traffic is back up, but public transport usage is still way below levels seen prior to the lockdown.
• Aviva Investors’ property team says that it It will take a significant drop in infection rates, most likely through pharmaceutical interventions, to exit this second phase of containment and for life to return to something like normal.
• Anybody who has been out and about over the last two months would surely echo that view.
Late night economy:
• There are still parts of the economy that are effectively still shut. Nightclubs, cruise ships and events companies amongst them.
• The Night Time Association has commissioned a report from the Institute of Occupational Medicine, which suggests a number of ways in which night clubs could evolve their offer in order to be allowed to open safely.
• The IOM on behalf of the NTIA looks at transmission means for Covid, at entry points for infection, at surfaces, cleaning and airborne risks and it concludes that there are mitigating actions that can be taken at every stage to reduce risk.
• The IOM says that ‘layering of controls’, that is enacting a number of protocols on top of each other, must surely reduce risk. It says ‘the cumulative impact of layered barriers is difficult to prove due to lack of data. Theoretically if using no barrier or control is 100% risk, using one reduces the risk by 50%, using two by a further 50% (75% cumulative risk reduction) and so on.’
• This is surely true but, with school reopening now in the headlines, getting share of voice may be tough.
Other Covid news:
• New West End says that West End footfall was up 12% on Monday vs the same day a week earlier. Year on year, footfall is down 45%.
• London pub The Culpeper says that it has been able to support its furloughed team members by using revenue produced by its online gift vouchers, introduced at the start of lockdown.
• SSP Group yesterday announced that it was to tweak its remuneration policy in the light of feedback from shareholders. SSP also says that ‘during the year SSP, as a travel-based food retailer, has been significantly impacted by COVID-19. In response, the Board has taken all available actions to protect profit and preserve cash, whilst working closely with our clients and other stakeholders to maintain appropriate service levels. These actions included significant salary reductions across all senior management, the Group Executive and Group Board.’
• SSP adds ‘the Committee intends to continue engagement with shareholders over the coming months regarding our approach to executive pay in the current environment and, in line with the normal three year cycle, our review of the Directors’ Remuneration Policy.’
• A JD Wetherspoon pub in Wrexham has been served with a coronavirus improvement notice after three staff tested positive for the disease. The company says it is ‘disappointing’ that its procedures ‘were not followed on this occasion’. It will retrain employees. JDW says it has ‘strict policies in place to ensure staff do not work in close proximity for anything other than very short periods of time, and, if such proximity cannot be avoided, that the necessary mitigating measures, such as the use of PPE, are implemented.’
• Brewdog has announced that it is now a carbon neutral negative company. It says it will remove twice as much carbon from the atmosphere as it emits. The company says that it will invest over £30 million across its business as part of a new climate action programme. Brewdog is reported to have bought 2,050 acres of Scottish Highlands and plans to plant one million trees over the next few years.
• Flow measurement and IoT company Vianet has updated on trading saying ‘it is very encouraging that the number of Vianet customers’ sites [among pub customers] who have resumed operations has risen from 56% to over 80% during the past six weeks, which is higher than we had anticipated. Importantly, the volume of beer sales across pubs which have re-opened compares favourably year on year, indicating positive consumer sentiment.’
• Vianet says ‘we continue to provide support to our customers by billing 30% of normal monthly charges for the c. 20% of pubs which still remain closed. For the c. 80% which have re-opened, we are invoicing 70% of normal recurring charges until the end of October 2020, at which time normal contract terms will resume.’
• Vianet says ‘although the C-19 situation remains uncertain, the Board is confident that we have taken the correct measures to ensure we can accelerate the momentum we had generated before the pandemic, and we look forward to updating the market in due course.’
• China’s ‘biggest hot pot restaurant brand’ has launched its second European site at The O2 in London.
• Papa John’s has further increased sales during the Covid-19 pandemic saying that it has increased LfL sales by 24.2% for North America for the period of July 27 to August 23.
• Papa John’s says its ‘sales, driven by product innovation, remained strong in August.’ It adds ‘mobile ordering is our fastest-growing platform as customer ordering and consumption continues to be affected by pandemic. This is accelerating our growth.’
• The CBI has reported that UK retailers are now cutting jobs at the fastest pace since the financial crisis. It says retailers ‘will be wary of deteriorating household incomes and the risk of further local lockdowns potentially hitting them in the pocket for a second time.’
HOLIDAYS & LEISURE TRAVEL:
• You can take a horse to water.
• Specialist travel operator Pettitts Travel reports that 53% of the over-50s it questioned would not travel until the Covid-19 pandemic is resolved, whatever that means.
• The UNWTO has said that up to 100m tourism industry jobs could be at risk worldwide. The UNTWO says: ‘It is imperative that we rebuild the tourism sector in a safe, equitable and climate friendly manner and so ensure tourism regains its position as a provider of decent jobs, stable incomes and the protection of our cultural and natural heritage.’
• Club Med has reported a spike in sales of holidays to Portugal.
• Ryanair is to increase flights to Portugal from 12 UK airports after the government removed the country from its quarantine restrictions list.
• Cunard, owned by Carnival Cruises, has cancelled its cruises until March next year. It says this is ‘an acknowledgement of the UK Foreign Office guidance’. Cunard says ‘after very careful consideration and reviewing the latest guidance, we simply do not feel it would be sensible to start sailing again with our current schedule so we have reviewed future itineraries.’
• Carnival’s Princess Cruise operation has announced that it is cancelling its early 2021 World Cruises and Circle South America cruises on two ships.
• Meanwhile Costa Cruises, which is also owned by Carnival, has announced that it will perform Covid-19 swab tests on all passengers when it recommences Italian cruises from 6 September
• Fred Olsen Cruise Lines has said that ‘our initial steps back into cruising, when we believe it is safe to do so, will be baby steps closer to home, closer to the UK, then a little bit further.’ It adds ‘there will be less exotic cruising, certainly to start with, and once we feel that’s worked really well and we have confidence with everything we’re doing and the guests have confidence, the governments have confidence, then we can be more extensive in the cruising we do.’
• Virgin Atlantic has won the support of its creditors for a £1.2bn rescue plan
• American Airlines is to cut 19,000 jobs in October
• Escape games company Escape Hunt has announced that eight of its UK sites have been named by TripAdvisor as a Travellers’ Choice Winner. The company says ‘whilst the uncertainty from COVID-19 remains, the strong support shown by our customers, evidenced by the TripAdvisor™ scores, coupled with the confidence shown in the business by our investors gives us cause for optimism.’
• Reports suggest that Nintendo is to release an upgraded version of its Switch gaming console next year.
FINANCE & ECONOMICS:
• Sterling up at $1.3138 and €1.112. Oil higher at $46.04. UK 10yr gilt yield up 6bps at 0.27. World markets mostly lower yesterday. London set to open up a handful of points as at 7am.
START THE DAY WITH A SONG:
The song has been furloughed. See you on the other side.
RETAIL WITH NICK BUBB:
Nick is back after the Bank Holiday.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 20 Aug 20 Tasty AGM
• 21 Aug 20 GfK consumer confidence numbers
• 2 Sept 20 Gym Group H1 numbers
• 3 Sept 20 PPHE H1 numbers
• 8 Sept 20 Fever Tree H1 numbers
• 8 Sept 20 DP Eurasia H1 numbers
• 10 Sept 20 Morrison’s H1 numbers
• 10 Sept 20 Rank FY numbers
• 24 Sept 20 Safestay H1 numbers
• 28 Sept 20 Diageo AGM
• 30 Sept 20 Compass Group FY update
• 30 Sept 20 Everyman Media H1 numbers
• 30 Sept 20 888 Holdings H1 numbers
• 6 Oct 20 Restaurant Group H1 numbers
• 9 Oct 20 JD Wetherspoon FY numbers
• 3 Nov 20 DART Group AGM
• 24 Nov 20 Compass Group FY numbers
• 26 Nov 20 Britvic FY numbers
Many results are likely to be delayed. For information purposes, the results below were delivered at these dates last year.
2019 COMPARATIVE RESULTS:
15 Aug 19 Vianet trading update, 22 Aug 19 Playtech H1, 22 Aug 19 Sportech H1, 28 Aug 19 Loungers FY results, 28 Aug 19 Fulham Shore AGM, 30 Aug 19 Gear 4 Music AGM, 6 Sep 19 Greene King AGM, 10 Sep 19 888 Holdings H1, 12 Sep 19 Comptoir H1, 19 Sep 19 Diageo AGM, 19 Sep 19 City Pub Group H1, 19 Sep 19 Saga H1, 23 Sep 19 Brighton Pier Group FY, 24 Sep 19 TUI Group FY trading update, 24 Sep 19 DP Poland H1, 24 Sep 19 Ten Entertainment H1, 24 Sep 19 Hotel Chocolat FY, 24 Sep 19 AG Barr trading update, 24 Sep 19 Tasty H1, 25 Sep 19 Shepherd Neame FY, 26 Sep 19 Time Out H1, 26 Sep 19 M&B FY trading update, 26 Sep 19 SSP FY update. 27 Sep 19 Escape Hunt H1
• None yesterday.
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