Cancellations, FUL, travellers, inflation, trading, West End, Vianet etc.:

A DAY IN THE LIFE:

I was thinking the other day about the purpose of knowledge – but even that statement, of course, is loaded with meaning as it suggests that knowledge isn’t an end in itself but rather a means of achieving something else.

Knowledge might be hoarded, miser-like, by someone who pulls it out to show off from time to time. They may know long, Latin-based words that none of the rest of us know or care about, for example.

Or they may know what one, long-dead Greek bloke did or said to another but, overall, isn’t knowledge meant to help us do something else better? Use fire or light to open up the night. Utilise a wheeled cart to move agricultural product to market or the Internet to do things quicker but, I’ve concluded, it’s perfectly possible to be better informed but more confused.

Indeed, that may be the default position for many of us. On to the news:

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CANCELLATIONS:

Thanks for the responses, which were in many cases broadly similar. The thrust seems to be that some, hopefully a relatively small number of, big corporations are cancelling whilst smaller gatherings seem to be going ahead. Features include:

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FULHAM SHORE – ANALYSTS WEBINAR:

Following the release of its H1 numbers, Fulham Shore hosted a webinar for investors and our comments are set out below:

H1 trading:

• Both businesses, when open, traded considerably ahead of 2019 comps.

• Adjusted EBITDA rose from £5.0m to £6.9m, despite the group trading without restriction for only 10 of the 26 weeks in H1.

• Many of the group’s restaurants are in residential areas. The Greek had a good summer, outdoor seating is now under cover.

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PUBS & RESTAURANTS:

Foodservice analyst Peter Backman has advised that companies in the sector establish what their reaction will be if the Omicron variant leads to further restrictions on trade. In outlining a wish-list, Mr Backman says have a plan, have some cash resources in reserve and keep in touch with your stakeholders – all of them whether employees, suppliers, customers, landlords, owners and suppliers of capital.

You miss them when they’re gone:

Foodservice analyst Peter Backman also highlights the importance of travellers on the hospitality industry. He says, in the past, ‘travellers were hidden in plain sight.’ However, now that they are in short supply (other than in some staycation hotspots), their absence can represent a real hit to turnover.

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Accountancy firm Hays Macintyre has presented its latest thoughts on the hospitality sector in the UK saying that ‘the overall mood from operators mirrors that from the last survey in July 2021, with 71% of operators either ‘confident’ or ‘very confident’ (70% in July 2021) and only 7% expressing a lack of confidence (9% in July 2021).’

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Inflation:

Bank of England deputy governor Ben Broadbent has suggested that inflation will be ‘comfortably’ above 5% next spring. He points to energy bills as one of the major drivers. He says ‘the aggregate rate of inflation is likely to rise further over the next few months and the chances are that it will comfortably exceed 5% when the Ofgem cap on retail energy prices is next adjusted, in April.’ The decision as to whether or not the Bank of England’s MPC puts interest rates up on 16th of this month is said to be finely balanced.

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Supply issues:

The government is due to start implementing border customs checks on goods entering the UK from the EU on 1 Jan. This has been postponed a number of times (and it may be postponed again) but, if it happens, it could further delay products on their journey to the UK’s pubs & restaurants.

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Research commissioned by Takepayments and conducted by Perspectus Global in November 2021 shows that two fifths of firms have increased prices due to staff shortage and a further 17% expect to do so in the next three months. The research also found businesses within the food and drink sector have seen the largest rise in salaries with 15% increasing their wages by 50% to 100%.

13% of small businesses said that recruitment issues have caused a negative financial impact to their business, with 30% of business owners planning to increase pay for open vacancies and 34% are looking to increase pay for existing staff in a bid to retain them. 

A survey by Deliveroo has found that one in five restaurants have been forced to temporarily close due to staff shortages or supply chain issues over the past three months. Some 54% of restaurants said they had to remove items from their menus due to a lack of availability, and nearly half had to increase prices.

Two thirds of restaurants reported being understaffed and 30% said they had fewer staff than six months ago. Deliveroo is backing UKHospitality’s campaign to keep hospitality VAT at 12.5%.

Mayor Bill de Blasio has told MSNBC that all New Yorkers will need to be vaccinated if they want to go to work, with the policy taking effect on 27 December.

COMPANY & OTHER NEWS:

West End landlord Shaftesbury reports this morning that it ‘has announced it has signed over 60 new retail, hospitality and leisure brands in Carnaby, Seven Dials, Chinatown, Soho and Fitzrovia since 1 October 2020.  The strength of demand from operators also coincides with the rapid recovery in footfall and sales across its locations and represents a vote of confidence in their long-term appeal and prospects.’

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Vianet Group has reported H1 results saying that ‘the Group has seen a strong recovery in our Smart Zones division, aligned to the re-opening of pubs through Q2 2022, together with good growth in both new business and unit sales in our Smart Machines division. This has resulted in a good H1 2022 performance, improving the quality of our strong recurring revenue base.  Vianet has also made progress towards commercialising data capture in other verticals, which will provide the Group with a further growth engine.’ Vianet reports revenue of £6.3m (against H1 2021: £4.07 million, H1 2020: £8.41 million). Adjusted operating profit is £0.82 million (H1 2021: adjusted operating loss of £0.38 million, H1 2020: adjusted operating profit £2.00 million). The basic loss per share is 1.15p (H1 2021: basic loss per share at 4.86p, H1 2020: basic profit per share 6.00p).

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Deliveroo shares fell another 3% yesterday to hit a new low on concerns that there could be a fresh clampdown on the gig economy. The Times says this could push up courier pay rates. Deliveroo has also conducted a survey saying that one in five restaurants have been forced to temporarily close due to staff shortages or supply chain issues over the past three months. It says that the best thing that the government could do to help is keep VAT at 12.5% on food and non-alcoholic drinks.

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The MA reports that JW Lees is concentrating on survival but looks to the new year for opportunities, with managing director William Lees-Jones saying ‘we will be patient and even then we will only add sites that sit comfortably within our tight acquisition criteria and perhaps more importantly are sites that we can add value to with the JW Lees brand.’

The Inn Collection Group has acquired Knaresborough’s historic The Dower House and Spa in Yorkshire, taking the group’s estate to 26 sites. The Dower House and Spa will undergo a ‘complex’ refurbishment during 2022.

Wine Intelligence claims that almost 40% of regular wine drinkers are actively moderating their consumption, particularly among younger age groups.

Cornish Bakery is rebranding its sites throughout 2022 following an impressive year of trading which saw LfL sales up 30% on 2019 levels. Founder Steve Grocutt ‘Bakery is the new coffee shop and our carefully crafted, disruption-driven Cornish Bakery brand evolution will surprise many’.

Flat Iron is set to open its tenth restaurant, located opposite The Young Vic on the The Cut in Waterloo. The new site will launch in Spring.

In the US, Jack in the Box has agreed to acquire Del Taco for $575m with the transaction expected to close during the first calendar quarter of 2022. Combined, the companies will have over 2,800 restaurants across 25 states.  

LEISURE TRAVEL & HOTELS:

Pre-departure testing is required from today for returning passengers to the UK (and for visitors). Trailfinders Sir Michael Gooley says the rules are ‘another shattering blow to the industry’. He says ‘there is no logic in clamping down on visitors from countries where no Omicron has been detected, when passengers from Glasgow to London are getting off the train at Euston with no checks at all.’

Travel Weekly reports that ‘the UK domestic breaks sector faces a knock-on effect as the government moves to increase the number of quarantine hotels available to cope with an expanded travel red list.’ It says stock is being taken out of the market.

ABTA has warned that new travel regulations ‘could tip some companies over the edge’. People visiting or returning to the UK will have to take a pre-departure Covid test from today.

Uber has said it may have to start charging its UK customers VAT at 20%.

MPs and consumer campaigners are calling on the health secretary to clamp down on PCR test firms overcharging amid stricter restrictions on international travel. The Competition and Markets Authority (CMA) wrote to 25 private travel testing firms last week warning them to review their terms and conditions and practices or risk enforcement action.

OTHER LEISURE:

Virgin Active is reported to be looking ‘for a new chief executive and finance director seven months after a hotly contested financial restructuring saved it from collapse’ reports Sky.

FINANCE & MARKETS:

Accountant KPMG has reported that the economic outlook for the UK has been clouded by shortages, rising costs and the possibility of more Covid restrictions.

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The CBI has cut its expectation for growth this year from the 8.2% it saw in June to 6.9%. It has cut its 2022 forecast from 6.9% to 5.1%. The CBI says ‘we should be raising our sights on the economy’s potential and seizing the moment.’

An interest rate rise next week is now said to be in the balance.

Markit reports that the UK construction industry remains in growth. It says ‘November data highlighted a welcome combination of faster output growth and softer price inflation across the UK construction sector.’ The measure came in at 55.5, up from 54.6 in October.

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RETAIL WITH NICK BUBB:

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