Prison labour, Markit, marketing, takeaway, delivery, Gfinity & other:

A DAY IN THE LIFE:

With the sun once again shining and a Bank Holiday coming up this weekend, it’s perhaps not surprising that the number of ‘out-of-office’ replies shot up yesterday.

And it may rise further as we approach the weekend but, it’s September next week and, with all of those things being pushed back to that month or ‘the autumn’ or ‘after the summer holidays’ we – and everyone else – could shortly have our hands full.

Anyway, we had a power cut yesterday evening at home. First thing to do is check you’re not on your own – because then you really are in trouble – and we found 180 houses were affected. So far, so good. But then the white vans and behelmeted engineers started flying around and, when the torches came out and they started climbing into fields with satnavs, we knew we were in trouble.

Hence a) this email is a little truncated and b) our camping stove, torches and candles got a bit of an outing. However – and for the moment feeling a bit lonely at our desk – let’s move on to the remaining August news:

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PUBS & RESTAURANTS:

Supply – labour problems:

• Prisoners on day release are to help fill vacant jobs in the meat processing industry after talks were held between meat industry leaders and the government yesterday. The Association of Independent Meat Suppliers says it will contact members who required staff and put them in contact with the Ministry of Justice. The AIMS says ‘it’s down to the members. They [the prisons] have got offenders and prison-leavers, we have got members who need labour. It seems sensible to bring the two together.’

• Further comment: see premium email.

Trading – supply of services, sourcing of labour and products:

• The Markit PMI numbers (see also Finance & Markets below) are a bit of a blunt instrument but the Services element does usually give something of an insight into how hospitality is faring. Indeed, last month, a substantial part of the rise was put down to the reopening of hospitality and, in the interests of symmetry, it is only right that we point out the slowdown in growth that’s apparent in August. It is worth mentioning that the numbers are still indicating growth rather than contraction.

• These are flash numbers and they could be revised either way, but Markit reports that ‘at 55.5 in August, down from 59.6 in July, the seasonally adjusted IHS Markit/CIPS Flash UK Services PMI Business Activity Index was above the 50.0 no-change mark for the sixth month running but signalled the weakest rate of expansion over this period.’ It adds ‘survey respondents attributed higher levels of activity to the reopening of the UK economy and subsequent improvement in demand for business and consumer services. However, there were reports that staff shortages had constrained the recovery, while others commented on less favourable demand conditions.’

• Markit points to problems with supply of products and access to labour.

• Further comment: see premium email.

• Interpreting the figures, the BBC says ‘staff and supply shortages have taken their toll on the UK’s economic recovery this month’ and adds that ‘firms have complained that self-isolation requirements for contacts of people with Covid have made it hard for them to maintain staffing levels.’ It says ‘those rules were dropped from 13 August for people who have been doubly vaccinated,’ the implication being that any continued disruption could be down to Brexit or some other factor.

• Foodservice analyst Peter Backman comments that the pandemic has led to a more innovative use of outdoor space.

• The latest from the Barclaycard Payments’ quarterly SME Barometer suggests that optimism in the hospitality and leisure sector across SMEs is at its highest level since the start of the pandemic.

Other trends:

• The Pragmatist points out that ‘TikTok was the most downloaded app globally in 2020 and boasts a user base of 13 million in the UK alone.’ It says ‘although this is still relatively small in comparison to other social media platforms, such as Facebook (42 million) or Instagram (29 million), TikTok is rapidly growing in popularity.’ It says that suppliers of goods and services, including hospitality operators, could do well to factor TikTok into their marketing programmes if they have not already done so.

• Further comment: see premium email.

Delivery & takeaway:

• CGA has pointed out that ‘delivery and takeaway sales growth begins to stabilise as consumers return to the On Premise.’ This will come as a relief to many operators – but then next task is to make sure that demand comes back for the operators’ own On Premises product, whilst at the same time trying to ensure that as few delivery and takeaway sales as possible are actually lost.

• CGA says ‘despite restrictions on indoor service lifting following ‘freedom day’, deliveries and takeaways are set to maintain a significant share of restaurant and pub groups’ operations.’ It says that ‘sales in July were 206% higher than in July 2019—a drop on the growth in June (225%) and May (273%), following the return of indoor service in June and ‘freedom day’ in July.’ Whilst down, this still represents a spectacular rate of grow.

• CGA says delivery has maintained its 20.5% share of market month-on-month ‘while takeaway sales (defined as being collected from an outlet by the customer, including Click & Collect and Drive-Thru) declined by 1.3%.’ This despite the fuller reopening of the sit-down offer. Karl Chessell says ‘as consumers returned to eating and drinking out following restrictions lifting, growth has naturally begun to slow in delivery and takeaway sales. However, it’s clear that consumer behaviours have shifted and hospitality at home will remain an important consideration.’

• Further comment: see premium email.

• Delivery. In Australia, Woolworths Group says it is teaming up with Uber Eats for same-hour grocery deliveries.

Corporate insolvencies:

• Accountant Cork Gully comments on corporate insolvencies in the UK (across all sectors) saying that ‘despite the rise in economic output between Q1 and Q2, corporate insolvencies increased by 31%, to stand at 3,334 across the UK. This rise was higher than previously expected. However, quarterly insolvencies still stand below the average for 2019 of 4,636, down some 28%. Separately, monthly data shows that there were 1,180 insolvencies in July 2021, slightly above the average for Q2.’

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Other news:

• Boots has announced a delivery trial with Deliveroo to deliver from its stores in 14 cities in as little as 20 minutes. Deliveroo says ‘this partnership will mean more choice and selection for our consumers, delivered in as little as 20 minutes, and will create more work for riders across the UK.’

• In the US, industry tracker Black Box Intelligence and Snagajob has suggested that wages for hourly limited-service restaurant workers rose by 10% in the second quarter compared with a year ago. Staff turnover rates are also reported to have risen with that for limited-service restaurants now 144% in June, up from 135% in 2019.

• The most popular beer in the world based on Google data is reported to be Corona. Japan’s Sapporo Beer took second place with Modelo, Kingfisher and Asahi in the next three slots. Heineken was number six and Budweiser was 10th.

• Big Table Group, the operator of Las Iguanas, Bella Italia and Café Rouge, has appointed Lauren Burrill as the new marketing director of its Café Rouge business.

• Gordon Ramsay is reported set to open a second restaurant in London’s The Savoy hotel next month. The River Restaurant will have seafood as its central offer.

• UK sustainable restaurant group, Lussmanns, is to open a fifth restaurant. The group says ‘Berkhamsted is a stunning location and the perfect place for our fifth Lussmanns. Over the past 20 years, we have a built a trusted restaurant brand: our customers trust Lussmanns to deliver exceptional food, with excellent service, while committing to a set of ethical values that place the treatment of our planet, and of our people, at the top of the agenda.’

• Japanese restaurant brand ‘gyoza’ is to open a second restaurant in London.

• Ossett Brewery & SALT Beer Factory has announced the launch of a new cocktail concept in the heart of Leeds.

HOTELS & LEISURE TRAVEL NEWS:

• Research undertaken by the Press Association has suggested that there have been some 50 changes in the rules for international travel since the first Covid-19 lockdown in spring 2020. The study finds that the rules changed virtually every week from July 2020 to January 2021. The research was usually communicated through transport secretary Grant Shapps’ Twitter account.

• Some 82 private travel testing companies are to be issued a warning by the government that they should be careful not to mislead customers. Health Secretary Sajid Javid said “it is absolutely unacceptable” for any company to be “taking advantage” of holidaymakers.

• The outbound travel market in Germany is in relapse a little as Turkey has joined Spain on the Covid-19 high-risk list. German tour operators have reported few cancellations to Turkey but tour operator FTI told the travel trade publication FVW: “We expect a few re-bookings.” FWW says sales fell “significantly” through July and August having benefited from an “upswing” in May and June.

• Fred Olsen is now the first cruise line to complete an international sailing from the UK since March 2020. The cruise, with around 800 fully vaccinated guests on an itinerary to Iceland which set sail on 14 August, has now returned to the UK.

OTHER LEISURE:

• Gfinity plc announced yesterday that it was proposing to buy Megit Limited, a private company which owns and operates the website Stock Informer, in both the UK and US for an initial consideration of £5.0 million, comprising £2.5 million in cash and £2.5 million in new Ordinary Shares in the Company. The company also announced that it was undertaking a placing of new shares at 4p to raise £3m.

• The company announces this morning that it ‘has conditionally raised £3.3 million (before expenses) under the Placing, Subscription and PrimaryBid Offer. The Placing was oversubscribed.’ The co says the new shares should start dealing on 13 September 2021, subject to the passing of the Resolutions by Shareholders at the General Meeting. CEO John Clarke says ‘Gfinity’s strategic focus is based on strengthening and growing ‘what we own’, in particular the Gfinity Digital Media group. The proposed acquisition of Stock Informer delivers this. It is a highly profitable ecommerce referral site for gamers and their lifestyles. Stock Informer will be embedded into the GDM division once the transaction completes. It is a transformational acquisition for the Company and highlights the ambition of the Directors to continue to drive profitable growth within the Group.’

FINANCE & MARKETS:

• Markit flash PMIs. See also Pubs & Restaurants above. Markit reports that ‘UK private sector companies experienced a sharp slowdown in output growth during August.’ It says ‘survey respondents widely reported constraints on business activity due to staff shortages and supply chain issues.’ It adds that ‘efforts to rebuild capacity and strong optimism towards the business outlook contributed to the fastest rise in employment numbers since the index began in January 1998.’ Re the numbers, the composite flash PMI was at 55.3 in August, down from 59.2 in July. Markit says ‘the headline seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index dropped for the third month running.’

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• The Resolution Foundation has said that the impact of the stamp duty holiday in pushing up house prices has been overstated. It says that higher savings accrued over lockdown, changes in housing preferences, and cheap mortgage rates were more important.

• Sterling up at $1.3734 and €1.1693. Oil price higher at $69.21. UK 10yr gilt yield up 1bp at 0.54%. World markets better yesterday with London set to open around 3pts higher as at 7.15am.

RETAIL WITH NICK BUBB:

• Nick is on a well-earned break. Back after the Bank Holiday.

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 17 Aug 21 Fulham Shore FY results

• 17 Aug 21 Just Eat Takeaway.com H1 numbers

• 18 Aug 21 Carlsberg H1 numbers

• 19 Aug 21 Rank FY numbers

• 20 Aug 21 GfK UK Consumer Confidence numbers

• 25 Aug 21 Adnams AGM

• 1 Sept 21 PPHE H1 numbers

• 2 Sept 21 Jet2 AGM

• 9 Sept 21 Gear4Music AGM

• 15 Sept 21 Restaurant Group H1 numbers

• 21 Sept 21 Compass Group full year update

• 22 Sept 21 Ten Entertainment H1 numbers

• 23 Sept 21 Playtech H1 numbers

• 25 Sept 21 (est) GfK UK Consumer Confidence numbers

• 1 Oct 21 JW Wetherspoon

• 5 Oct 21 Gregg’s Q3 update

• 13 Oct 21 Marston’s FY trading update

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 23 Nov 21 Compass Group FY numbers

• 24 Nov 21 Britvic FY numbers

• 30 Nov 21 Marston’s FY numbers

• 8 Dec 21 TUI FY numbers

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