Langton Capital – 2021-04-12 – Deliveroo, pubs reopening today, JDW, SBUX, McDonald’s & other:
Deliveroo, pubs reopening today, JDW, SBUX, McDonald’s & other:
A DAY IN THE LIFE:
I’m beginning to think that Karma is, well, not much of a thing.
Either that or I’m building up one almighty favour from the wider Cosmos because, when it comes to items lost versus items found on trains, in taxis and in holiday lets, I’m very much out of pocket.
I mean including the years when the kids were younger, we’ve lost Gameboys, game cartridges, backpacks, bum-bags, holiday money, expensive resort guide books, a full box full of ties (don’t ask), fleeces, other clothes, cuddly toys and a countless, truly countless number of umbrellas.
And in the items found column? Nothing. No, really, nothing.
However, Hull City’s been on a good run recently – eight wins & two draws from the last ten matches – so maybe that’s payback of a sort.
Anyway, good luck to all those pubs & restaurants reopening for outdoor trade from today. It’s due to be nine degrees and sunny later in York, eleven or so in London. Could be worse. Maybe that’s Karma. On to the news:
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PUBS & RESTAURANTS:
Pubs & restaurants reopen for trade outdoors:
• Demand: We believe that there is some pent up demand – but the extent to which this is expressed, will depend on the weather. It was minus three with snow overnight in York. Today is better at minus two, rising to eight degrees with sun. Companies that have invested in some sort of covered (and maybe heated) areas could be at a premium. There will be some concerns as to whether the ambiance & atmosphere will make going out worthwhile. Some councils are reportedly demanding that face coverings are worn in beer gardens when guests are not seated.
• Supply:. The BBPA says that only 40% of pubs have the space to trade outside. The percentage for restaurants will be markedly lower. Supply will depend on a) the legal ability to open and b) the desire to do so (i.e. can you make a sensible return from a small beer garden or yard or even strip of pavement?) As always, supply and demand will be linked, not least because the former will be driven in part by an anticipation of the latter. Separately, the BII says that just over 50% of its members will be able to open today (if they choose to do so).
• Langton Comment: See premium email
Trade bodies’ comments & observations:
• Trade bodies UKH, BII and BBPA have jointly published a one-page guide for the key rules that licensees need to know. The bodies say ‘the clarity is especially important after wildly differing – and often incorrect – interpretations of some of the new rules have been sent to businesses by some local authorities. The trade bodies have urged enforcement bodies to take a light-touch but consistent approach. This document will help businesses to push back on incorrect enforcement.’ The advice reminds operators that ‘social distancing applies between groups of customers (not within groups sitting at tables)’ and that ‘payment is permitted at the bar, as a last resort if payment cannot be taken outside.’ The trade associations say the ‘reopening of pubs and other hospitality businesses outdoors is a step forward for the full reopening of our sector.’
• The BBPA reports that ‘pub operating businesses have invested more than £285 million in supporting their leased and tenanted publicans as they prepare to reopen once more from April 12th.’ The BBPA says ‘the Government must now recognise the investment the pub industry has made in its pubs, ahead of their reopening from April 12th, by continuing to support the long term recovery of UK pubs and address the disproportionate tax burden faced, through permanently lower VAT rates extended to all food and drink, a cut in beer duty and Business Rates reform.’
• CGA says ‘most consumers will remain sharply focused on safety despite a growing boldness about going out as lockdown restrictions ease.’ It says ‘57% of GB consumers think it essential for staff to wear protective equipment’ but that ‘21% of consumers say testing on entry would make them less likely to visit a venue, and 15% feel the same way about the need to provide a COVID-related certificate.’ CGA says ‘with just over five weeks to go until indoor service can be resumed, there are signs that consumers are starting to feel bolder about being around other people in venues. A quarter (26%) of consumers now say they would prefer a busy or lively atmosphere when out, compared to just 15% in August 2020. The number wanting to meet in large groups has more than doubled since then, from 8% to 19%.’
• SIBA, CAMRA and Cask Marque have pointed out that ‘beer drinkers returning to pubs can finally get a taste of fresh cask beer.’ The trade and consumer bodies are running a campaign entitled ‘Cask is BACK, so back CASK.’ SIBA says ‘whether you’re a real ale enthusiast or sometimes beer drinker, we’re asking everyone to support their local independent breweries and opt for their first pint back in the pub to be some delicious local cask beer.’
Other Covid news:
• The Scottish Beer & Pub Association is calling for a ‘fairer deal for the country’s pubs, bars and other licenced venues ahead of expected reopening later this month, which they say is currently ‘grossly unfair’.’ CEO Emma McClarkin says ‘Scotland’s pubs and bars will be at a competitive disadvantage to those in England, where all limitations on trading times will be removed later this month.’
• Tenzo reports on the restaurant industry saying that ‘70% of businesses remained open through this third national lockdown compared to 40% in lockdown 1.’ It says that ‘compared to Q1 2019, Q1 2021 sales are hovering at around minus 40%.’ Tenzo says ‘the recovery within the industry has been incredibly impressive – we’re seeing that a number of businesses have adapted and innovated to survive a very challenging period.’
• Working from home. Evidence is still mixed as to the intentions of both employers and employees. Separately, the Centre for Business Research at Cambridge University has said that working does improve mental health (via a feeling of self-worth, interaction with colleagues etc) but it says that this can be achieved by as little as one day a week of work. The economy wouldn’t work too well on that basis – but it may speak to intentions (or at least to desires) post lockdown.
• Bizimply reports that ‘hospitality businesses are likely to face significant challenges in restaffing as they prepare to reopen after lockdown.’
• Deliveroo – see above
• The Mail on Sunday reports that ‘Wetherspoons founder Tim Martin made £50million from selling shares while [the] pub chain was claiming furlough cash.’ This may be comparing apples with oranges. But The Mail on Sunday says ‘the outspoken businessman is now facing calls to hand back the furlough funds.’ It mentions £25m of furlough receipts in the month of January. The paper quotes Tory MP Sir Bob Neill as saying ‘a number of reputable firms have returned furlough cash if they have managed to weather the Covid storm better than expected, and they’ve been applauded for it. Perhaps Mr Martin might consider following suit.’ A Wetherspoon spokesman said: ‘We are a huge net contributor to the Treasury. Even in the last financial year, when pubs were closed by the Government for a long period, Wetherspoons paid £436.7 million in taxes, in spite of making a loss of £89.6 million.’
• Starbucks reports that more than half of its sales now come from cold beverages.
• McDonald’s is to close hundreds more sites within Walmart stores in the US. The Wall Street Journal reports that the number of co-located stores will be down to 150 by this summer, from a peak of 1,000 sites.
• London-based Vegan subscription box company The Vegan Kin has reportedly raised £3.5m in a Series A funding round.
HOTELS & LEISURE TRAVEL:
• Legal changes from today. Overnight stays are now permitted in self-contained accommodation with members of the same household but overseas holidays are still illegal.
• Transport Secretary Grant Shapps said on Friday that he is no longer advising people against booking their summer holiday. A traffic light system should be announced later today. Shapps’ comment suggests that not all lights will be red. There is some suggestion that ‘luxury’ long-haul destinations could open up before some more mainstream resorts in Europe.
• The average cost of a PCR Covid-19 test in the UK is more than double the price in other European countries. This could dampen demand. The government has said it will get prices down. At £128 per person, the tests will materially bump up the cost of a family holiday.
• Jet2holidays has said it will not recommence flights until at least June 24. CEO Steve Heapy says he is disappointed in the government’s suggestions to date. He says ‘after five weeks of the Global Travel Taskforce putting together the report they’ve come up with something that isn’t an awful lot different in structure to that we had in place last summer. They’ve committed to looking at cheaper tests but there’s no real detail. We are trying to run an airline, and we don’t know when we can start flying, where we can start flying to and the conditions under which we are operating.’
• The World Health Organisation has said it is opposed to vaccination certificates for travellers. The US government says it will not require them. The EU is dubious and the Labour Party in the UK is holding its fire.
• Celebrity Cruises says it has seen a “phenomenal response” from consumers for its UK cruises.
• IATA reports that the financial position of airlines has deteriorated further. This will happen in a high fixed cost model if demand is down 89% on two years ago, as it was in February.
• The Sunday Telegraph reports that CVC is backing a bid led by portfolio company Sisal, the operator of Italy’s most popular lottery, to run the UK national lottery. Camelot has run the draw since its inception.
FINANCE & MARKETS:
• The Halifax Building Society reports that there was ‘something of a resurgence’ in the UK housing market in March. It says prices were up 6.5% year on year.
RETAIL WITH NICK BUBB:
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 8 Apr 21 Everyman Media FY numbers
• 8 Apr 21 Constellation Brands FY numbers
• Est. 9 Apr 21 Barclaycard Consumer Spending (March)
• 13 Apr 21 Just Eat Q1 numbers
• 13 Apr 21 Revolution Bar Group H1 numbers
• 15 Apr 21 Deliveroo Q1 numbers
• 15 Apr 21 Pepsi Q1 numbers
• 15 Apr 21 Naked Wines FY trading update
• 15 Apr 21 Heavitree Brewery AGM
• 22 Apr 21 Domino’s Pizza PLC AGM
• 23 Apr 21 Gear4Music results
• 28 Apr 21 Carlsberg Q1 numbers
• 28 Apr 21 YUM Brands Q1 results
• 29 Apr 21 Molson Coors Q1 numbers
• 29 Apr 21 Texas Roadhouse Q1 numbers
• 30 Apr 21 Safestay General Meeting
• 4 May 21 Campari Q1 numbers
• 5 May 21 Ten Entertainment AGM
• 6 May 21 Bank of England MPC meeting
• 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
• 12 May 21 Just Eat AGM
• 18 May 21 Britvic H1 numbers
• 19 May 21 Marston’s H1 numbers
• 26 May 21 C&C FY numbers
• 24 Jun 21 Bank of England MPC meeting
• 27 Jul 21 Campari H1 numbers
• 5 Aug 21 Bank of England MPC meeting
• 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
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