Fuller’s read across, GfK, business confidence, inflation, Jet2 & other:

A DAY IN THE LIFE:

Internet problems first thing so will have to move on. It’s Friday, which makes IT problems a little easier to bear. And the main task of the weekend is to avoid getting suckered into going to the cinema again.

‘It’s only a tenner, dad.’

Well, yes, but add in the parking, the pre-film coffees, the other tickets and the popcorn and you don’t get much change out of sixty quid.

Inflation, huh? Anyway, have a good weekend and on to the news:

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FULLER’S COMMENTS & INDUSTRY READ ACROSS:

Introduction:

It’s easy to focus on the headline numbers but there are interesting and far-reaching comments in many financial updates. Fuller’s, yesterday, was no exception. The company commented on current trading, Provincial v London, rural vs the cities and the new normal (pre-bookings etc) as well as supply issues. 

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PUBS & RESTAURANTS:

Customer demand:

GfK has released its consumer confidence numbers for November saying that ‘UK Consumer Confidence creeps up to minus 14 in November despite soaring inflation.’ It says that the ‘seven-point jump in major purchase index is good news for retailers in run-up to Black Friday and Christmas.’ This will come as something of a relief to retailers including hospitality retailers in the run up to the busiest part of the year.

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The latest Lloyds Bank UK Recovery Tracker has shown that tourism and recreation was the fastest growing UK sector in October for the second month running. Lloyds says that the sector recorded a reading of 70 (where any number above 50 indicates rising output). Lloyds reports that the number of UK sectors reporting growth was at a three-month high last month although businesses were under pressure to raise prices.

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Xpert HR says that the average pay deal in the UK is worth just 2%, despite the CPI hitting 4.2% and the RPI touching 6%. It doesn’t feel like this to employers but, if wage-earners are failing to compensate for inflation, demand will dampen over time. The ONS has said that pay growth was averaging nearer 3.5% to 4% in the year to September.

Barclaycard says three in 10 businesses believe this Christmas will be their most successful of the last five years. It says 54 per cent of firms said they felt neutral or optimistic about the UK economy.

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The NIESR takes a more upbeat approach to disposable income saying ‘we expect weekly earnings annual growth to average 5.7 per cent in 2021 – the highest in two decades – and 3.6 per cent in real terms, after 1.8 per cent (nominal) and 0.8 per cent (real) in 2020.’ It adds ‘the strength of Average Weekly Earnings is explained by high bonuses, robust public sector pay growth and a cyclical recovery exaggerated by compositional effects and increased weekly average hours due to the end of furlough.’ However…

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Labour shortages:

The ONS has said that job vacancies across the hospitality industry are now around the 151,000 level. Bizimply and consultancy Hospitality Mavericks say ‘the ONS figures are a stark indicator of the challenges that hospitality operators are facing. Not only are most businesses running with vacancies, but experienced hospitality staff are being courted by other employers. People want to feel valued, and will move on quickly if they don’t.’

Hospitality Rising is seeking to raise £5m ‘to launch a recruitment campaign to attract more talent into the industry as it starts to recover and build back its muscle post Brexit and the impact the pandemic continues to have on one of Britain’s most loved industry sectors.’ Mark McCulloch says ‘the support we’ve had from the industry and some of our marketing contacts has been amazing. We now need to raise enough money to really land a high profile that will both attract people back into the industry or make those who haven’t considered our sector as a viable, exciting, creative and rewarding career.’

Shifting patters of demand.

The British Beer & Pub Association says that Brits drank more wine and spirits – but less beer – during the 2020 lockdowns. It says wine consumption as a percentage of all alcohol consumed rose by 2 percentage points but beer consumption was 4 percentage points lower. Spirits took an additional 2pps of the whole market.

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Inflation is everywhere. The NIESR points out that ‘the increase of 1.1% in annual inflation from 3.1% to 4.2% was almost as large as the recent increase in August, which was the largest in over a decade.’

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Supply side (hospitality outlets rather than goods & services):

Harden’s London restaurant guide suggests, perhaps unsurprisingly, that London restaurants have recorded their weakest growth of the past 30 years in terms of outlet numbers. Harden’s says some 149 new restaurants opened per year over the last two-year period – but some 125 restaurants a year closed.

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Supply, product.

Crisps are still in short supply following production difficulties at Walkers. Interestingly, in its latest Real Time Indicators release, the ONS says ‘shelf availability of items between 12 and 15 November 2021 was lowest for “crisps (multipack)”, with 29% of this item’s availability marked as “none” or “low”; shelf availability was highest for the “beer” category, as 71% of this item was recorded as having “high” availability.’ So you can have your beer but there will be fewer crisps with it. The ONS is using Kantar data.

COMPANY & OTHER NEWS:

Big Table is to reopen what was its Café Rouge in Haywards Heath under its new name ‘Rouge’ on 22 November.

More details on Starbucks’ cooperation with Amazon in the US sees press comments saying the first such store opens on Thursday in New York City.

Newly-listed Hostmore, which owns the Friday’s chain of restaurants in the UK, is to host a presentation on its business today at 12.00. The company says ‘the presentation is open to all existing and potential shareholders.’

Costa Coffee is to sell Marks & Spencer sandwiches and hot food in more than 2,500 outlets. Some 30 products will be carried. M&S says the venture gives ‘many more customers the opportunity to enjoy our wide range of sandwiches, salads and snacks.’

Alibaba shares were weak in the Far East after the gigantic retailer warned of a slowdown in consumer spending.

Lumina Intelligence has pointed to three areas where it believes restaurants will be able to make money. it highlights the use of technology, delivery and omnichannel delivery.

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LEISURE TRAVEL & HOTELS:

Jet2’s share price fell sharply yesterday on the back of the group’s H1 results announcement. Jet2, which has a March year end, needs to make money in its first half as it is virtually certain to lose money in its second. The group announced a loss (see yesterday’s email) and the shares fell by almost 10% to 1078p. They were 1330p earlier this month.

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The GBTA says the business travel market in the UK will shrink by 17% this year compared to 2020 with a business spend of $17.6 billion.

The Global Business Travel Association goes on to say that global business travel expenditures are predicted to have rebounded 14 per cent in 2021 to $754 billion. It says this recovery has been slower than it forecast in February this year. The GBTA says ‘there are factors, related to Covid-19 and beyond, that could impact the road ahead over the coming years. However, there is optimism overall as the industry, companies and travellers worldwide lean into recovery and the much-needed return to business travel.’

Grant Shapps has announced that the HS2 link to Leeds is to be scrapped.

TfL’s finance committee has spoken of ‘managed decline’ if it does not get more money from the taxpayer. This wouldn’t help the return to work or revenues at central London F&B outlets.

PE firm Zetland Capital Partners is reported to have agreed to buy two hotels from Macdonald Hotels & Resorts.

FINANCE & MARKETS:

Sterling lower at $1.3489 and €1.88. Oil up at $82.04. UK 10yr gilt yield down 5bps at 0.92%. World markets mixed yesterday but London set to open some 41pts higher as at 6.45am.

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