New variant, M&B meeting, labour issues, SSP, Remy, Diageo etc.:

A DAY IN THE LIFE:

So, inflation’s running wild, Black Friday madness is upon us, there’s a Tube Strike and Storm Arwen is going to batter the east coast over the next 48hrs but, on the other hand, it’s Friday meaning that, on balance, today is getting-better sort of good day.

No real plans over the weekend.

But got a jab tomorrow, doing my pin-cushion impression and then may use that as an excuse to clear out the beer cupboard, drink everything that’s within 6mths of its sell-by date so as to, not quite recover, but rather ensure that I have something other than a sore arm to think about on Sunday morning.

Anyway, have a good one and let’s move on to the news:

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MITCHELLS & BUTLERS FULL YEAR NUMBERS:

Following the announcement of its FY numbers, Mitchells & Butlers hosted a meeting for analysts and our comments are set out below:

Trading (sales): To say the very least, FY21 was an abnormal year. At least we hope it was. The company endured two lockdowns & various other restrictions. H1 was severely impacted. H2 has seen consistent improvement. More on costs, metrics, costs again, costs and costs. Also, current trading, uses of funds etc.

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PUBS & RESTAURANTS:

New variant:

Markets will be rattled this morning by the appearance of a new variant of Covid-19 in southern Africa. At the moment, it is not clear what the implications are, but the market is likely to make snap decisions and begin to hedge in the possibility of the return of travel restrictions and possible shutdowns.

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Labour shortages:

Fourth has reported that rising wages are putting increased pressure on UK pub & restaurant companies. It says ‘for the first time since the outbreak of the pandemic, all sectors within hospitality saw staff headcount increase in October, compared to last year. However, the labour shortage is still evident with overall industry staffing levels some 18% down on the same period two years ago.’ It says ‘hourly rates of pay across pubs and restaurants have climbed steadily since trading restrictions were lifted in April, and are likely to continue to do so with the introduction of new National Living Wage rates coming into force in April 2022, with the headline rate for over-23s set to be increased by 6.6% from £8.91 to £9.50 per hour.’

Fourth says British workers now account for 54% of the hospitality workforce, compared to 47% in October 2019. EU workers make up 31% of the hospitality workforce, compared to 42% in October 2019 and workers from non-EU countries currently make up 15% of the workforce, compared to 11% in October 2019.

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Lidl said yesterday that the use of short-term visas will not be sufficient to solve labour shortages in the food industry. It says there are labour shortages ‘in every corner you look at the moment’. The Times reports that it is raising wages for its lowest-paid workers, from £9.50 to £10.10 per hour outside London and from £10.85 to £11.30 in the capital from March next year as it battles with rivals to recruit staff.

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Supply:

The CBI has said that supply constraints are restricting output. Order books are reported to be at their strongest since the records began being kept in 1977. The CBI says ‘intense supply side challenges continue to put pressure on firms’ capacity to meet demand. Alongside record order books, stock adequacy was the weakest on record in November and manufacturers are increasingly having to pass on significant cost increases to customers.’

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The ONS’s real time stats show that the Great Crisp Shortage is abating. Some 24% of shops said they had no stock or less than they wanted compared to 33% recorded a week earlier.

Inflation:

The CBI has said that retailers are putting up their prices at the fastest rate since 1990. There have bene “big upward swings” in November at clothing and department stores. In the quarter to November, the balance of retailers reporting higher selling prices stood at 77%, a 30yr plus high.

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Two more energy companies went bust yesterday to take the total, we believe, to 25. This will put another two groups of consumers onto prices nearer the spot price.

COMPANY & OTHER NEWS:

SSP Group has announced ‘the appointment of Patrick Coveney to the role of Group CEO, effective 31st March 2022.’ It says ‘this follows the announcement on 14th July 2021 that Simon Smith is to leave the business in December. Jonathan Davies, in his role as Deputy CEO and CFO, will lead the Group Executive Committee and oversee day to day business prior to Patrick joining.’ Chairman Mike Clasper says ‘we are pleased to announce the appointment of Patrick who will join us as we emerge from the pandemic with considerable momentum.’

The Press take on M&B. The shares went up, which is the starting point for late editions. The BBC quotes M&B as saying that ‘office Christmas parties will be smaller and more suburban this year’. The Times focuses on cost increases & inflations (which is where we would have gone) and Sky takes the same line saying ‘hospitality firms face a “major challenge” from higher energy and staff costs as they seek to rebuild following the pandemic. That won’t come as a shock to operators.

Diageo plc has today updated on its capital return programme, saying that this will be the ‘next tranche of its previously announced return of capital programme of up to £4.5 billion to shareholders by 30 June 2024.’

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Remy Cointreau shares rose sharply yesterday as the group raised its full year profit estimates swelled on Thursday after the firm hiked its full-year profit forecast on the back of strong demand in China, the United States and Europe. The co says it now expects “very strong” organic growth. Operating profit for the six months ended Sept. 30 rose by 104.5% on an organic basis to 212.9 million euros. CEO Eric Vallat says the company has made an “encouraging” start to Q3 in China thanks to sales on Singles’ Day.

Trade bodies UK Hospitality, the British Beer & Pub Association, the British Institute of Innkeeping and Hospitality Ulster have come together to make recommendations to operators as to how to combat drink spiking and protect customers.

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Tube strike in London today impacting the Victoria, Central, Northern, Jubilee and Piccadilly lines. That won’t do much to encourage workers to stay in the office for the full five days this week.

JD Wetherspoon has said that some ‘major investors and advisors are breaching the Corporate Governance Code.’ Alleging hypocrisy as the group’s own practises are sometimes questioned, Wetherspoon says it is ‘disappointed to note that a minority of major investors and corporate governance advisors are breaching the 2018 Corporate Governance Code by using a “box-ticking” approach to its guidelines.’

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Analysis by economist Shashi Karunanethy in the Rebuilding Hospitality: The Changing Shape of the UK Workforce report that was created using data from workforce management platform Deputy, shows that the proportion of millennials working in hospitality has declined from 49% to 42%. At the same time, the proportion of workers from Gen Z has risen by 5%, which equates to around 150,000 workers.

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Data from Lumina Intelligence Pub & Bar Market Report 2021 shows that the average price of a pub meal increased by 1.9% YoY. Prices for mains have risen the most across all dishes at 2% growth and the average value has increased by 22p.

Flight Club has announced its next opening in 2022 will be at The Brewery Quarter, Cheltenham, taking the chain to 9 sites. The new Flight Club is set to open in Spring.

Vacancies in the hospitality industry have been forecasted to increase by 75,000 this December, compared to 2019. One of the key issues the pandemic created was staff not returning from furlough as over the last six months of furlough.

Arc Inspirations reports sales up 42% since July 19 compared to 2019, with Banyan, BOX and Manahatta recording sales of £17.5m since April 21. The company reported EBITDA of £3.7m, more than double the same period last year.

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Following sales which exceeded expectations, Wendy’s is set to ramp up its UK growth plans – targeting 50 new openings in 2022, up from the 10 new outlets originally planned. According to Abigail Pringle, chief development officer at Wendy’s, revenues at the restaurants it has opened this year are ‘far more’ than the chain had expected, at £40,000 a week.

Insights firm Brandessence reported that the craft beer market grew to$41.07 billion in 2018 and will reach $92.80 billion in 2025. The sector is said to be growing at a 12.35% CAGR by 2025 end. 

LEISURE TRAVEL & HOTELS:

Shares in Intercon and Whitbread rose by around 3% each yesterday on the back of international travel recovery hopes highlighted in a broker note. That could go into sharp reverse in today’s trading.

Sales and marketing director at Barrhead Travel Group, Nicki Tempest-Mitchell, told the Abta Travel Trends conference that the average selling price of a holiday per customer has risen by 20%. Mark Duguid, MD at luxury operator Carrier, agreed, saying spending is up 37% on 2019.

Stuart Baker, business director for travel at market research firm GWI, said that consumer confidence in Q4 has dipped for the first time since Q1 because of the ‘headwinds’ caused by levels of household debt and disposable income. However, GWI figures show that 55% of people want to travel in 2022, which equates to almost 20 million Brits who have not yet booked a holiday.

New Zealand’s government has set out a three-step plan to reopen its borders, aiming to welcome back foreign visitors by April 2022. From 16 January, New Zealand will allow fully vaccinated citizens, residence-class visa holders and other eligible travellers to enter the country from Australia.

Village hotels has partnered with Swurf, allowing Swurf app users to locate, book and access discounts from approved host venues that welcome remote workers.   

OTHER LEISURE:

Cloud gaming company Antstream Arcade has closed a financing round of $3.5m led by the Atari Group. Antstream Arcade offers players the opportunity to play and compete in the world’s largest library of iconic games from the arcade era up to the modern day retro indie titles.

FINANCE & MARKETS:

The rapid rise in coronavirus infections in Germany and high inflation rates are said to be behind the slide in consumer confidence in Germany. GfK reports that sentiment fell to minus 1.6 points in November, down from a revised 1.0 points a month earlier.

The SMMT reports that UK car production has fallen to its lowest level in 65yrs on the back of Brexit, chip shortages and the pandemic. The SMMY blames “production stoppages” linked to the shortage of semiconductors. Second hand car prices have shot up as that, in some cases, is all that would-be buyers of new vehicles can get.

Bank of England governor Andrew Bailey, whose MPC did not last month put interest rates up in order to combat the inflation that he has said is transient, has said that guiding the markets as to what he is about to do is a ‘murky’ business.

Sterling weaker at $1.3298 and €1.1845. Oil price lower at $79.90. UK 10yr gilt yield down 5bps at 0.96%. World markets heading lower on fears of the new Covid variant with London set to open down around 165pts as at 7am.

RETAIL WITH NICK BUBB:

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