Saga, Ten, Entain, Pret, product shortages, confidence, inflation etc.:

A DAY IN THE LIFE:

Bit busy with announcements and the like this morning & hoping to make the most of the weather later. On to the news:

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PUBS & RESTAURANTS:

Product shortages – CO2.

CF Industries will restart production at its two CO2 factories after reaching an agreement with the government. It is not clear yet what incentives the government has offered the firm. Prices may rise but, to the relief of the hospitality industry, supplies may have been secured.

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The consumer:

The freeing up of CO2 supplies should head off what would otherwise have been a worsening of food delivery problems. Business secretary Kwasi Kwarteng says ‘there will be no three-day working weeks or a throwback to the 1970s’ but senior Tories have said that hundreds of thousands of Britons face a “very, very difficult” as a result of rising energy costs and the removal of the £20 per week increase in Universal Credit. This, as with any ‘withdrawal’ from the economy, will act as a depressant on consumer spending and may impact incomes for hospitality companies.

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PM Boris Johnson, currently in New York, has described the energy crisis as a “short-term problem.” He says there will not be disruption to food supplies at Christmas. He told the BBC news that the government was doing all it could.

Trading:

Lumina Intelligence reports in its UK Pub & Bar Market Report 2021 that ‘following a tough 18 months, which saw a decline in turnover of 61%, the UK pub and bar market is expected to start rebuilding in 2021, with growth of 63% forecast ahead of a full recovery by 2024 when the market will be worth £23.4bn.’

Vaccine passports (Scotland):

Scottish pub-goers or those staying in hotels north of the border may be required to show vaccine passports from next week if the premises has a “designated space” for dancing, says First Minister Nicola Sturgeon. This has led to a furious backlash from the industry with questions of definition high up the list of complaints:

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Hospitality business confidence:

The latest Business Confidence Survey from CGA and Fourth reveals some positive sentiment after summer trading, as well as the urgent need for extended government support on tax, debt and labour.’ It says that ‘business confidence recovering, but major challenges keep hospitality fragile.’

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Price rises.

The Morning Advertiser reports ‘night-time economy adviser and operator Sacha Lord estimated prices of drinks will go up by between 7% and 10% with the average price of a pint set to rise by 25p, in line with the 7.5% VAT increase to cover the overall losses felt by operators.’ The price rise may, indeed, happen but the rationale is flawed as the VAT cut (and the two upcoming increases) did not apply to alcoholic drink.

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The MA reports JDW as saying it will put up the price of its meals by 40p a plate when VAT goes up to 12.5% in just over a week’s time. Sacha Lord says ‘operators will take at least three years to recover from this pandemic, and I urge the Government to rethink this [VAT] rise and extend the current rate until that point.’

Trading.

UKHospitality held its annual conference yesterday, featuring business leaders, industry experts and policymakers. UKHospitality Chief Executive Kate Nicholls called for additional Government support to help safeguard the sector’s recovery.

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Company & other news:

Pernod Ricard has announced that it has signed a deal to buy Whisky Exchange, an online retailer of spirits. Pernod Ricard said that the acquisition is in line with its ‘consumer centric strategy of meeting new consumer needs and expectations’. 

The Guardian reports that the labour shortage is being driven by employers struggling to recruit low-paid workers.

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Pret a Manger has announced that it aims to hire 3,000 staff by the end of next year after cutting around that number of staff in 2020. The company says that it hopes to double in size in the next five years.

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Bidfresh says that ‘festive menus built around fresh and local food will inspire post-lockdown customers to eat out in the run-up to the peak Christmas and New Year trading period.’ It has conducted research that has found that ‘59% of consumers plan to stay local and support local businesses; and a similar number expect to out to eat and drink several times in the run up to Christmas.’

Subway (globally) is reported to have achieved its highest August sales since 2013 last month.

PizzaExpress has converted its London Aldwych restaurant on The Strand into a vegan pop-up. The company has been working with plant-based meat company Jack & Bry for just over a year to develop an exclusive vegan pepperoni.

Aldi is testing its new checkout-free technology in a London concept store, allowing customers to pay for their shopping and leave without visiting a till.    

HOTELS & LEISURE TRAVEL NEWS:

Saga plc has reported H1 results for the six months ended 31 July 2021 saying that its ‘continued strategic progress positions Saga to emerge stronger from the pandemic.’ It says that it has resumed cruising and has had a ‘robust Insurance performance.’

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Per Travel Weekly, the airline industry is busily ramping up capacity ahead of the resumption of holidays to the US in November.

The Jet2 share price is now up some 20% on its 10 September lows.

Carnival Cruise Lines reports that half of its US fleet has resumed sailing, with 11 ships back in service. President Christine Duffy said ‘Having half of our US fleet back in operations provides positive economic impact in our homeports and port of call destinations’.

Boeing has predicted that European airlines will create new premium-priced cabins for wealthier leisure passengers to try to make up the billions of pounds lost in the pandemic.

Teesside airport’s turnaround is running ahead of schedule, with a profit expected within the next three years – 24 months earlier than originally forecast. The airport it is on track to record revenues of £30.5m by 2025.

OTHER LEISURE:

Ladbrokes owner Entain is considering a £16.4bn takeover offer from US fantasy sports betting firm DraftKings. It has earlier rejected a £14.6bn approach and has yesterday and today made statements.

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Ten Entertainment Group has reported H1 results for the 26wks ended 27 June 2021 saying that it has seen an ‘exceptional summer performance’ and adds that ‘full year trading now anticipated to be ahead of previous management expectations.’ The business was closed for the first 20 weeks of the 26wks reported, reopening in full on 17 May for six weeks. Comps are tricky as ‘in 2020 the business traded for the first 12 weeks of the year, followed by 14 weeks of enforced closures due to Covid-19 restrictions.’

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Hollywood Bowl has signed a 15-year lease at Resorts World Birmingham. The 26,000 sq ft site will contain 17 bowling lanes, with work due to be completed by December.

Flutter has announced that ‘the legal dispute between Flutter and the Commonwealth of Kentucky has now been settled in full.’

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FINANCE & MARKETS:

Government debt.

The government’s debt pile rose more rapidly than expected in August as debt interest payments rose sharply. The ONS reports the deficit was £20.5bn in August 2021, down from about £26bn in the same month a year when the pandemic was taking a much greater toll. The number was around £5bn above estimates.

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The OECD has said that higher base inflation will continue over the next two years. It says ‘the speed of the recovery has increased inflationary pressures, quickly pushing up prices to where we expected them to be before the pandemic.’ It adds that ‘policymakers in advanced economies should monitor these developments without delay.’

PM Boris Johnson has refused to commit to securing a UK-US free trade deal by the next general election reports Sky.

The OECD has updated forecasts and believes that the UK economy will grow by 6.7% this year, the fastest rate in the G7. The UK, which had more ground to make up than other economies, is ahead of the US (around 6% this year) and the EU (around 5.3%).

Sterling lower at $1.365 and €1.1645. Oil price higher at $75.24. UK 10yr gilt yield up 1bp at 0.80%. World markets broadly better yesterday with London set to open around 37pts higher as at 7am.

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