MARS, RTN, eviction ban, rental debt, Just Eat, overseas holidays etc.:

A DAY IN THE LIFE:

Here’s a lockdown task for you: run your freezer down, cart it outside on a day when it isn’t chucking it down with rain, and defrost the sucker.

Sounds easy but it’s trickier to identify some of the contents than you might think.

I mean bread, milk, bought packets of peas, other veg and the like, I can recognise quite easily by just reading what’s written on the bags, packets or boxes but, if asked to differentiate between leftover and subsequently frozen stewed rhubarb, stewed plum, chicken curry and spaghetti Bolognese etc., it’s considerably more like a lottery.

So, it’s freezer-bag surprise and rice for tea tonight and, once defrosted, it’s got to be eaten though, admittedly, it might be by the dog who, though he’s yet to ever say thank-you, isn’t too fussed what he eats.

Anyway, another day with no heating or hot water has dawned so, without further ado, let’s move on to the news:

ADVERTISE WITH US:

Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details.

CHANGED EMAIL FORMAT:

The Premium Email is unchanged. The Free Email is now written and pre-sent the evening before. It should include much of the news but not any breaking stories from the morning that it is sent such as company releases, nor Langton comment. See Twitter for in-day comment.

Let us know if you would like an example of the Premium Email.

Prices are £295 for one subscription, £495 for multiple, both plus VAT). Or sign up for easy in, easy out month option:

HERE

RESTAURANT GROUP – FULL YEAR NUMBERS:

The Restaurant Group hosted a webinar yesterday to discuss its full year results our comments thereon will be in today’s premium email

Reported in yesterday’s premium email, we commented:

The outlook:

• Regarding current trading and the outlook, the company says that ‘the short-term outlook is uncertain whilst restrictions are in place’

• It says ‘average standalone delivery and takeaway sales in Wagamama and Leisure at c.2.5x and c.5.0x pre-Covid-19 levels respectively during the current national lockdown.’;

• RTN adds ‘the Group has strong capability to deliver an accelerated reopening plan, once the current restrictions for hospitality businesses end’

• It adds that it believes it is ‘well positioned across its diversified brand portfolio to benefit from the sustained removal of restrictions over time and to deliver long-term shareholder value’

Conclusion:

• CEO Andy Hornby says ‘the Covid-19 pandemic has presented enormous challenges for our sector but the TRG team has responded decisively to re-structure our business whilst preserving the maximum number of long term roles for our colleagues.’

• He says ‘TRG is operationally a much stronger business than 12 months ago.’

• Mr Hornby goes on to say ‘the Capital raise announced today, alongside the debt re-financing announced last week, represents the last important step in our re-structuring process and provides TRG with the long term flexibility to invest in growing our business.’

• The CEO concludes ‘whilst the sector outlook remains uncertain, and we are mindful of continuing restrictions across the UK, we are confident that the actions announced today will allow us to emerge as one of the long term winners.’

The group updated further on 1 March:

• Last week, the group updated on its debt financing & the impact of Covid saying, as mentioned above, that it had agreed £500m of new long-term debt facilities. For details, see our not of 1 March.

• RTN pointed out at the time that the coupon was c7% with no formal amortisation requirements. It said ‘the New Facilities provide the Group with enhanced liquidity and long-term financing with the maturities of the Term Loan and the RCF being in 2026 and 2025, respectively.’

• It added last week the new debt ‘will be used to repay and refinance in full all of TRG’s existing debt facilities…which are all due to reach maturity by July 2022.’

• Regarding trading, RTN last week said it is burning cash at the rate of around £5.5m ‘per four week period during ongoing national lockdown, with a c.£40m working capital outflow post year-end due to unwind of supplier creditor positions’

• The Group adds ‘the cash burn rate is expected to stay at this level until the end of the current restrictions for hospitality businesses, which as per government guidance on 22 February are due to end no earlier than 17 May 2021.’

• It says it has seen ‘strong recent trading for delivery and takeaway across c.200 sites in Wagamama and Leisure businesses’

• It has an ‘accelerated reopening plan for dine-in trading, once the current restrictions for hospitality businesses end, with all viable sites being reopened within two weeks’

• RTN said on 1 March it ‘currently has approximately 200 sites trading for delivery and takeaway across its Wagamama and Leisure businesses.’

• It concluded last week ‘with this strong operating platform in place, the Group has good capability to deliver an accelerated reopening plan for dine-in trading, once the current restrictions for hospitality businesses end, with all viable sites being reopened within two weeks.’

PUBS & RESTAURANTS:

Covid-19 and other secular issues:

• Eviction ban extended.

• The Ministry of Housing, Communities & Local Government has tweeted ‘we are continuing to support businesses by extending the commercial eviction ban until the end of June. This will help those worst affected by the pandemic – like bars and restaurants – get back to business when doors reopen.’

• The Housing Secretary, Robert Jenrick, says ‘it is right that as we move through the roadmap, we ensure that businesses and renters continue to be supported.’ Kwasi Kwasi Kwarteng says ‘we’re doing everything we can to ensure businesses get the support they need to get through this pandemic and reopen when it is safe to do so.’

• He says ‘the government’s current position is to support commercial landlords and tenants to agree their own arrangements for paying or writing off rent debts by 30 June. This is supported by the code of conduct published by the government last year, setting out best practice for these negotiations. But, if these discussions do not happen and there remains a significant risk to jobs, the government is also prepared to take further steps.’

• Langton comment: See premium email

• Changing face of the High Street. M&S’s flagship store near Marble Arch is to be demolished and redeveloped with reduced retail space and new offices located on the site.

• The unit was built and opened in 1930. With the move towards working from home likely to be either permanent in part or slow to ebb, more office space may not be top of most lists for what is needed on Oxford Street.

• Lumina Intelligence has suggested that ‘2021 will be the year that restaurants bounce-back with a vengeance, with our data suggesting a surge in demand expected upon the market full reopening.’

• Lumina says ‘with over half of UK adults very/extremely likely to dine-in at a restaurant by the end of June, we predict that the UK restaurant market could see over 26m visits in the first six weeks of opening, if the government’s roadmap goes to plan and dine-in operations open from May 17 2021.’

Company & other news:

• Marston’s has announced that CEO Ralph Findlay is to step down from the role of CEO at the end of the current financial year ending 30 September 2021. The company announces that the process to appoint his successor is underway and a further announcement will be made in due course.

• Mr Findlay has been with Marston’s for 25yrs and he has been CEO for an almost unprecedented 25yrs. Chairman William Rucker says ‘Ralph has been CEO of Marston’s since 2001 and is one of the longest serving business leaders in an industry which has seen significant change and challenges during that time. Ralph is widely respected and admired by all those in the hospitality industry and I have thoroughly enjoyed working with him over the last three years.’

• Rucker continues ‘he has overseen the development of Marston’s into one of the leading pub companies in the UK, through operational innovation to drive change and also transforming the business through strategic acquisition.  Most recently, Ralph was instrumental in the formation of the joint venture with Carlsberg UK and the agreement to operate the SA Brain pub estate in Wales.’

• The move is amicable. Chairman William Rucker says Findlay ‘leaves Marston’s in excellent shape and well-positioned to rebuild trading and go from strength to strength when restrictions are lifted. Whilst he remains in his role for another six months, I would like to take this opportunity to thank him publicly on behalf of the Board, our people and our shareholders for his outstanding contribution to us, the Company and the industry.’

• Mr Findlay says ‘it has been a great privilege to lead Marston’s for 20 years. I joined the Board in 1996 and have been fortunate to work with many inspirational, talented and dedicated colleagues in an industry which is very close to my heart. Looking ahead to reopening and welcoming customers back into our wonderful pubs, I am confident that we have great people, a fantastic team in place and that my successor will enjoy working with them and the Board to take this great Company forward to the next phase of its development.’

• See Restaurant Group above. In brief, interesting to see it a) coming to the market for equity twice (as JDW has done but many others have not – but may yet) and b) raising a sum of money that has many observers asking if this might not be a war-chest by another name.

• Just Eat Takeaway mentioned Gregg’s by name yesterday as helping to power UK growth. Just how there can be enough money in a sausage roll for the manufacturer, the retailer, the delivery person and Just Eat is somewhat remarkable.

• JE says its UK business ‘processed 179 million orders in 2020, representing a growth rate of 35% compared with 2019, with strong growth in both marketplace and Delivery. Delivery orders more than doubled year-on-year.’

• It says ‘the growth was supported by our partnership with McDonald’s, as well as an exclusive partnership with Greggs, the UK’s leading bakery. In the second half of 2020, Delivery order growth reached 260% and the growth of marketplace business was 31% compared with the second half of 2019.’ The company adds ‘revenue grew by 42% year-on-year to €725 million in 2020 from €509 million in 2019.’

• Langton comment: See premium email

• Swingers has announced that it will launch in the US later this year, with two new venues in Washington D.C. and New York. This comes on the back of a reported additional investment in the company by PE house Cain International. The latter first invested in Swingers back in November 2017.

• Swingers’ CEO Matt Grech-Smith tells City AM that moving to the US was the “natural next chapter” for the brand. He says ‘we’re thrilled to put a stake in the ground in two of the U.S.’s most influential cities, known for their electric nightlife, diverse culture and prominent hospitality industries.’

• US operator Wendy’s has said that it thinks ‘the biggest thing that we’re seeing is the consumer expectation of how they leverage digital and how it connects to a more seamless experience.’ This may be a bit jargon-rich but it is likely that increased use of tech post Covid will be a feature in the hospitality industry going forward.

• Interestingly, Wendy’s said that Q4 breakfast sales had been particularly strong. It says ‘in the fourth quarter, breakfast remained solid at approximately 7% of sales and drove a meaningful increase to restaurant AUVs in 2020. We believe that breakfast has been and will be transformative to our overall restaurant economic model, giving us fuel for growth into the future.’

• Feed It Back has suggested that ‘post-lockdown expectations of ‘the perfect meal out’ have made guests more likely to complain about restaurants and bars.’ It says ‘new data has revealed that customer expectations post-lockdown focus on certain reassurances being met and the venues that thrive and celebrate returning trade will be those that consider the mindset of its visitors.’

HOTELS & LEISURE TRAVEL:

Air inclusive holidays (and cruises) vs staycations:

• The UK hospitality industry is conflicted here. The bulk of the industry (UK hotels, pubs, restaurants, holiday parks etc.) would like to see more UK consumers remain in the country. But this doesn’t work for the overseas holiday companies such as TUI, On the Beach, Jet2 etc and nor does it suit Carnival.

Positive air-inclusive comments:

• IATA has conducted a consumer poll & finds three is a growing confidence in a return to air travel. It says, however, that there is some frustration with current travel restrictions.

• Some 57% of respondents expect to be travelling within two months of the pandemic being contained (up from 49% in September 2020) with a further 81% saying they will be more likely to travel once they are vaccinated.

• IATA says ‘it is becoming clear that we will need to learn to live and travel in a world that has Covid-19.’ It says ‘people want to get back to travel, but quarantine is the showstopper [see below]. As testing capacity and technology improves and the vaccinated population grows, the conditions for removing quarantine measures are being created. And this points us again towards working with governments for a well-planned re-opening as soon as conditions allow.’

• EasyJet boss Johan Lundgren has told Travel Weekly that the outbound travel industry “can have a strong summer” but the restart of international travel could be ‘stop start’.

• YouGov reports around 50% of those surveyed are in favour of mandatory health passports for international travel. Older people were more keen on vaccine passports and the like than were younger would-be travellers.

Negative news for international travel:

• Transport secretary Grant Shapps has told the BBC it is still too early to book overseas summer holidays, despite some countries looking as though they are moving to open up.

• Under the current roadmap, 17 May is the earliest possible date for overseas holidays. Shapps says the Global Travel Taskforce report will be published on 12 April.

• The IATA report mentioned above found that 84% of would-be travellers said they will not travel if there is a chance of quarantine at destination. This is around the same level as six months ago.

• Heathrow has said that it is seeing queues of three hours and sometimes six hours at border control. The queues prior to recent restrictions had been between 25 and 45 minutes. Heathrow says ‘we are seeing significant pressure on the border and we are seeing very long queues, and that is a worry.’

• Carnival yesterday pushed out re-sail dates to end-June at the earliest.

• Langton comment: See premium email

Other travel news:

• Jet2holidays and Jet2.com has reported a surge in bookings to Greece and Cyprus following news that the two Mediterranean destinations intend to welcome visitors back this summer. Jet2 CEO Steve Heapy says ‘the UK is the most advanced country in Europe when it comes to successfully rolling out a vaccine, so we applaud the Greek and Cypriot governments for their forward-thinking decisions.’ He says ‘this, on the back of the recent announcement by the UK government, gives customers great confidence that they can get away to enjoy the sunshine this summer and the numbers show that this confidence is increasing all the time.’

• STR has reported that major events could help the UK hotel industry later this year. It says bookings are rising in areas such as Glasgow, which will host the UN Climate Change Conference in November. STR says the bounces ‘indicate the optimism for vaccine distribution, better control of the pandemic and improved conditions for travel and events. Guest booking windows have shortened significantly during the pandemic, so there is plenty of potential for these levels to grow even higher as we get closer to the event dates.’

MORE LEISURE SNIPPETS:

• Highland Spring water sales are reported to have dropped by a quarter over the last year.

• Steak ’n Shake in the US is investing in self-service kiosks at which customers can place orders.

• Lego is reported set ready to recruit ‘hundreds of computer experts in the UK’ to cope with increased demand.

FINANCE & MARKETS:

• See premium email.

RETAIL WITH NICK BUBB:

• See premium email.

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 11 Mar 21 Playtech FY numbers

• 11 Mar 21 Morrison’s FY numbers

• 15 Mar 21 Carlsberg AGM

• 16 Mar 21 Gregg’s FY numbers

• 16 Mar 21 C&C pre-close trading update

• 17 Mar 21 Hostelworld H1 numbers

• 18 Mar 21 Fever Tree FY numbers

• 18 Mar 21 Gym Group FY numbers

• 19 Mar 21 JD Wetherspoon H1 numbers

• 23 Mar 21 DP Eurasia FY numbers

• 24 Mar 21 M&B AGM

• 25 Mar 21 Compass Group H1 update

• 25 Mar 21 TUI AGM

• 29 Mar 21 Ten Entertainment FY numbers

• 30 Mar 21 AG Barr FY numbers

• 31 Mar 21 Various Eateries AGM

• 7 Apr 21 Saga FY numbers

• 8 Apr 21 Sportech FY numbers

• 8 Apr 21 Constellation Brands FY numbers

• Est. 9 Apr 21 Barclaycard Consumer Spending (March)

• 13 Apr 21 Just Eat Q1 numbers

• 15 Apr 21 Pepsi Q1 numbers

• 22 Apr 21 Domino’s Pizza PLC AGM

• 23 Apr 21 Gear4Music results

• 28 Apr 21 Carlsberg Q1 numbers

• 4 May 21 Campari Q1 numbers

• 7 May 21 Intercontinental Hotels Q1 numbers

• Est 9 May 21 Barclaycard Consumer Spending (Apr)

• 12 May 21 Compass Group H1 numbers

• 12 May 21 Stock Spirits H1 numbers

• 12 May 21 TUI H1 numbers

• 18 May 21 Britvic H1 numbers

• Est 19 May 21 Marston’s H1 numbers

• 27 Jul 21 Campari H1 numbers

• 10 Aug 21 Intercontinental Hotels H1 numbers

• 12 Aug 21 TUI Q3 numbers

• 18 Aug 21 Carlsberg H1 numbers

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 8 Dec 21 TUI FY numbers

LANGTON CAPITAL: Made in Hull. Like all the best things. Langton Capital is a financial advisory company providing insightful views on the UK and global leisure industry and the wider consumer sector in general. Subscription to the daily email is free. Unsubscribing is painless. We provide daily off the shelf and bespoke research. We have helped with transactions, fund-raisings, disposals and other corporate issues. We have a good ear, we are impartial, independent and not half bad at what we do. If you think that we could help you or your business, drop us a line.