Punch, Gym Group, Domino’s, Omicron, HMG financial support etc.:

A DAY IN THE LIFE:

When asking for something, should you demand it, request it or plead for it?

I suppose it kind of depends on whether it is a) yours, b) not yours but you have a right to it or c) it isn’t yours and the person or body that currently has it doesn’t have to give it to you if it doesn’t want to.

An example of the first might be the lawnmower that you own and that you have lent to a neighbour and the second could be a modest tax refund from HMRC. The third might be state aid if your business’s revenue is suffering as a result of Covid-19 and it might be a bit confusing or problematic if you get you’re a), b) and c) alongside the wrong 1), 2) and 3).

Because if you plead for your lawnmower back your neighbour might decide you don’t want it enough to fight for it and they can sell it down the pawn shop. If you demand a tax refund back from HMRC they may delete your email in the first instance and, if you plead for it they might just chuckle,  kick back their chair and smoke a cigar.

And if you demand help when it involves a discretionary decision being made as to how finite resources should be allocated – e.g. fewer nurses or higher taxes and interest rates versus more support for pubs – there’s always the risk of a suboptimal outcome.

Just saying. Anyway, we’re getting towards the end of the week but, as we’re not three yet. Let’s move on to the news:

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PUBS & RESTAURANTS:

Inflation:

The Press is full of it and perhaps with good reason. The UK’s CPI has risen to 5.1% in the 12mths to November (up from 4.2% in October). This is the highest level in 10yrs and, should it rise much further, it would be at 30yr highs. The ONS says that higher transport and energy costs were behind the rise. The pandemic, Brexit red tape and trade friction, supply problems and other factors are also implicated. But what does it mean? The Bank of England will comment on interest rates at lunchtime.

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Supply issues:

Whether it is mild or not, if case numbers hit a million a day and regulations obliging people testing positive to self-isolate remain in force, labour will be in short supply come Christmas. Indeed, if a half of positive testers are in the workforce and they are obliged to stay off work for ten days, some 5m workers could be off work by the end of the month and that will have implications for the supply of labour and products. Of course, the R number could be wrong, mitigating effects may bring the one million number down, regulations requiring self-isolation could be changed but, if none of that happens, the numbers are what they are.

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Labour supply:

With customer demand down, the need for staff may be diminished but it is likely that the Omicron variant will lead to a sharp rise in staff absences shortly. The BBC reports ‘with Covid cases at record levels and rising, employers are bracing for large numbers of workers to call in sick.’

Government support:

With customers staying away and staff absences causing further problems, Chancellor Rishi Sunak is facing calls to put support measures back in place to support to hospitality businesses. PM Boris Johnson has told people to “think carefully” before going to social events but has offered no support. There is little aggregate information available at present but Sky says ‘one London restaurant alone was said to have had more than 300 cancellations in the last two days alone.’

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Restrictions overseas:

Norway has  banned the serving of alcohol in all hospitality venues in a bid to slow the spread of Omicron in the country. The Netherlands is extending its evening closing rules for shops and leisure facilities by another four weeks.

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Curry’s reports that footfall is falling in the face of the Omicron variant, with the company warnings that trade is weakening in the run-up to Christmas. Currys said ‘We may face into further headwinds from Omicron and associated restrictions’.

COMPANY & OTHER NEWS:

Domino’s Pizza Group reports that it has achieved a resolution with its franchisees that it says ‘heralds new era of collaboration and accelerated growth.’ It says it ‘believes the Resolution is a great outcome for all stakeholders: both DPG and franchisees’ long-term growth and profitability stand to improve with increased system sales and more new store openings, customers will benefit from further strengthened innovation and service, employees in the system will benefit from further recruitment and a more collaborative and growth-oriented environment, and shareholders will benefit from enhanced value creation.’

DOM says ‘under the Resolution, and consistent with our strategic growth plan, DPG will make strategic investments in the system to improve capabilities and drive system sales growth primarily through order count. Specifically, the Company has committed to: One-time capital investment of approximately £20m…increased marketing investment to support new national campaigns and promotions…an enhanced food rebate mechanism…and an improved new store incentive scheme to reward, encourage and accelerate new store openings.’

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Fortress Investment Group, the underbidder in the bidding war to buy Morrison’s has, alongside management, announced the acquisition of 100% of the equity of Punch Pubs & Co for an undisclosed sum. Punch Pubs has around 1,300 pubs across the UK. Fortress says ‘we are excited to team with Clive [Chesser, CEO of Punch] and the Punch management, which has done an exceptional job of navigating the challenges of the Covid crisis while positioning the business for long-term growth and value creation. We believe in providing strong management teams with the flexibility and support to execute their long-term strategic plans. The UK is an extremely attractive investment environment, and we will continue to explore other opportunities in this sector and across the UK, Ireland and Europe.’

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The Night-Time Industries Association (NTIA) has hit back at the government’s plan for Covid passports, with CEO Michael Kill saying ‘The NTIA has consistently opposed the introduction due to the many logistical challenges it poses for night-time economy businesses and what we have seen in Scotland and Wales where it has dampened trade by 30% and 26% respectively.’

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Transport for London (TfL) has said five lines plus Night Tube services on the Central and Victoria lines will be affected by strike action this weekend. The Rail, Maritime and Transport (RMT) union claims TfL has ‘ripped up’ an agreement on drivers being allowed to choose whether to work on night services. 

V Honest, a plant-based burger concept, is set to open its first  bricks and mortar restaurant in January, located at 17 Garrick Street, in Covent Garden. The company will also operate from delivery-only kitchens across London.  

McDonald’s is likely to expand its Beyond Meat McPland offer suggests US foodservice analyst BTIG. BTIG says the product has been successful and it estimates that a number of the eight test locations are selling some 500 McPlant sandwiches a week each.

LEISURE TRAVEL & HOTELS:

The UK Health Security Agency has said that almost 5% of the travellers who had to isolate as a result of visiting Red List countries in the latest round of hotel quarantines have tested positive for Covid-19.

City AM reports ‘passengers have been complaining of being stuck in hour-long queues at Heathrow airport, waiting for Border Force to process passengers at immigration.’ Heathrow said ‘we’re aware of longer immigration queues at this time, Border Force are working hard to process passengers.’

Robert Courts, the minister for aviation, insists that the current Covid-19 testing regime needs to stay in place over Christmas and New Year.

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Per Travel Weekly, travellers must show proof of a PCR or antigen negative test result before departure to France or Portugal. Self-administered antigen tests will no longer be accepted.

Hotel quarantine residents are being told to stay put and await further updates, despite some already leaving quarantine and returning home. The confusion comes after ministers removed all 11 countries from the red travel list on Wednesday at 4am. 

Reuters reports that Uber is looking to sell stakes in non-strategic assets including its holding in Beijing-based Didi Global Inc. Uber owns 12.8% of Didi, according to a filing in June by Didi. CEO Dara Khosrowshahi said ‘Our Didi stake we don’t believe is strategic. They’re a competitor, China is a pretty difficult environment with very little transparency’.  

OTHER LEISURE:

Cineworld shares lost some 39% of their value yesterday after the group announced that it had lost the latest round of its legal battle with Cineplex and had been ordered to pay the company C$1.23bn in compensation. This amounts to some £725m. Cineworld has said it will appeal against the decision. Cineworld had agreed to buy the Canadian company in December 2019 for £1.64bn but it pulled out of the deal in June last year due to the impact of the pandemic. Cineplex subsequently sued for breach of contract.

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Gym Group has updated on trading saying that it saw a ‘strong recovery in membership numbers following re-opening’ and it says that its prices have increased. The group adds that it is ‘trading in-line with market expectations for FY2021 for its key profit measure of Group Adjusted EBITDA Less Normalised Rent.’ CEO Richard Darwin says ‘whilst we are mindful of the near-term uncertain outlook as a result of the new Covid variant, we have the growth strategy, financial resources and expertise required to capitalise on those opportunities, widening access to inclusive and affordable gyms for all over the long term.’

Google has warned its American staff that they may be placed on unpaid leave and, ultimately, be fired if they do not follow Covid guidelines. A spokeswoman said ‘our vaccination requirements are one of the most important ways we can keep our workforce safe and keep our services running.’

FINANCE & MARKETS:

Goods exported from Ireland to Great Britain will be temporarily exempted from new border controls that need to be introduced on 1 January.

The Bank of England will update on interest rates today. The Fed in the US has signalled that it could raise interest rates three times next year. It suggests that it could withdraw its stimulus programme more quickly than previously planned. Fed chairman Jerome Powell says ‘economic activity is on track to expand at a robust pace this year, reflecting progress on vaccinations and the reopening of the economy.’

Sterling mixed at $1.3244 and €1.1734. Oil price higher at $74.56. UK 10yr gilt yield up 2bps at 0.74%. World markets mixed yesterday but US up and London set to open around 80pts higher as at 7am.

RETAIL WITH NICK BUBB:

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