DPEU, Heineken, Airbnb, employment levels, inflation, costs & other:

A DAY IN THE LIFE:

I think Wordle and, more dangerous still the Wordle Archive, is something that you could gainfully introduce to your frenemies.

Because, if hobbling them is the aim and the bite that it has taken out of my working day is anything to go by, it may hit productivity hard and allow you to ask with a smirk ‘did you achieve anything yesterday?’ safe in the knowledge that an honest answer would have to start with the word ‘no’ followed, embarrassedly, by a lot of excuses.

Indeed, shaking the thing off could be an issue and cold turkey the only realistic way to go and, for those who have had similar problems with Solitaire, 2048, Sudoku and other addictive games, the feeling will be familiar and ‘recovery’ could be relapse-strewn.

Anyway, what’s the best word to start with? Often ‘tears’ or the alternative ‘stare’ seems like a good one but enough of that, the weathers holding up OK in the north though I do hear we could be in for it shortly with sun, rain, cloud, snow and wind all forecast for Saturday. On to the news:

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PUBS & RESTAURANTS:

Demand shifts – demographics:

City AM quotes research from the Greater London Authority as suggesting that some of the young people, who left London during the pandemic, are coming back. It says the age group 18-29 dropped sharply at the start of the pandemic, as thousands of younger people, including large numbers of students and others who lived in cramped accommodation, left London to live elsewhere.

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Employment levels (see also yesterday’s comments) and the gap between earnings & costs.

The ONS yesterday highlighted that wage growth, whilst it was a shade above expectations, is running behind inflation. The raw data suggests that wages have fallen in real terms by 0.8% over the last twelve months. If numbers track at this level (and wages may sink a little further behind when inflation spikes at perhaps 7.25% in the spring), then there will be a further hit when take-home pay is considered as National Insurance will rise for both employees & employers in April. Comment below from trade bodies & the BCC.

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The ONS reports that job vacancies in the hospitality sector are estimated to have risen by over 700% from November 2021 to January 2022, year on year, with 178,000 positions currently unfilled. Data for the overall employee market show an estimated 1.298 million vacancies predicted for the latest period, which was at 608,000 a year earlier – representing a 113% rise.

Consumer squeeze:

City AM reports that City economists warn that consumers will have to ‘get used to’ living standards being eroded by soaring inflation. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said ‘The pressure on households’ real disposable income will intensify, slowing the recovery in consumers’ spending’.

The UK restaurant market will recover to 94% of its 2019 value in 2022, according to the Lumina Intelligence UK Restaurant Market Report 2021/22. 

The Morning Advertiser reports that Colliers has called a government review of business rates ‘underwhelming’. Colliers has issued concerns across several facets of the review, including the measures to enable more frequent revaluations which would result in reduced appeal rights and increased administrative responsibilities on ratepayers.

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The UK Champagne market reported a buoyant import increase of more than 30% last year, reaching 29 million bottles. Last year’s total was bigger than it was pre-Covid, with the figure up 7% on 2019’s 27m bottles, although still some way short of the UK’s historical high of 39.1m bottles in 2007.

The Insolvency Service has released monthly numbers for January showing that there were a total of 1,560 registered company insolvencies across England and Wales with 51 company insolvencies in Scotland.

The latest quarterly Barclaycard Payments SME Barometer reports that 40% of small and medium-sized businesses in the UK plan to hire staff with the companies planning to take on an average of six new employees before the end of March. Some 56.2 per cent of SMEs report a rise in earnings in the last quarter of 2021 and 2022 has started positively for many companies, despite economic uncertainties and Omicron.

Inflation:

The ONS has reported this morning that the CPI in the UK rose from 5.4% in December to 5.5% in January. See Finance & Markets below.

COMPANY & OTHER NEWS:

DP Eurasia has updated on minority shareholder protection and its board structure saying that it has ‘unanimously proposed additional takeover protection for minority shareholders.’ It says ‘as a temporary measure, the Company has entered into an amendment to the existing relationship agreement between it and its major shareholder, Fides Food Systems Coöperatief U.A’ and says ‘under the Relationship Agreement, Fides or a nominee in its group must (subject to certain exceptions) launch a takeover offer for all of the issued share capital of the Company if it, its affiliates or such persons acting in concert with it, own shares resulting in their aggregate holding being 50% or more of the Company’s issued share capital.’

Heineken has reported stronger than expected earnings in 2021 as a result of higher prices and cost savings. The company says volumes were up 4.6% on the year with increases in all regions except Asia. Revenues were up 12.2%. Operating profit was up by 43.8% to €3.41bn, ahead of a consensus at €3.30bn. The company says ‘overall we expect a stable to modest sequential improvement in operating profit in 2022.’ It still expects to be impacted by the Covid-19 pandemic this calendar year. The co will supply 2023 guidance later this year.

Monster Beverage Corp and Constellation Brands are in talks over a possible merger, at the pace of current talks a decision could be made in the next few weeks. The companies would reportedly have a combined market value of around $90bn. The exact structure of the transaction under discussion remained unconfirmed and representatives for each of the companies have declined to comment further.

The Caterer reports that McDonald’s has had to pull its Chicken Big Mac from menus after the product sold out ‘almost everywhere’ in the UK. The fast food chain would not confirm if supply chain issues were to blame but said the product would return ‘in a few weeks’.

Everards Brewery has requested an Environmental Impact Assessment (EIA) screening opinion and Outline Planning Application for a 6.5-acre site in Leicestershire for an office campus with a GFA of up to about 99,000 sq ft and a hotel with a GFA up to 60,000 sq ft.

John Gaunt & Partners has announced that it has appointed its first London-based licensing partner, Luke Elford.

Taco Bell  is accelerating international growth with a push to reach 1,000 units outside the US. In Spain, Taco Bell’s largest international market, the brand crossed the 100-unit threshold in December, and this year both the United Kingdom and India are expected to reach that milestone.

LEISURE TRAVEL & HOTELS:

Airbnb has reported quarterly numbers saying that the consumer squeeze is driving more consumers to try its services. The company said yesterday that it expected bookings to bounce back to pre-coronavirus pandemic levels for the first time in Q1 this year. CEO Brian Chesky says ‘we think probably the biggest growth area is going to be individuals.’ He adds ‘the reason why is because things like inflation are providing more pressure on families all over the world, and they’re going to require economic opportunity to be able to make it through this difficult time.’

Expedia has reported increased demand as it reports Q4 numbers saying that online travel searches rose by more than 70% year-on-year in Q4. It says ‘when we last left off in 2021, we were adjusting to impacts from the Delta variant of Covid-19 but still seeing improvements,” the company said in a new travel recovery trend report.’

TTG’s Travel Agent Tracker shows a broadly buoyant outlook among agents in January, with 87% of respondents said they took more new enquiries in January than they did in December, while 88% said they secured more new bookings month-on-month.

However, others were more cautious in their outlook, one agent said ‘New business is about 50% of normal. However, all the rebooks and changes are running around the same level. Makes it seem like it’s very busy, but without the revenue stream.’

Marriott has reported Q4 numbers saying that REVPAR was up 124.5% worldwide (on depressed prior year numbers). It says diluted EPS for the quarter was 142c (vs a loss of 50c per share in the same quarter in the prior year). Post tax profit for the quarter was $468 million, compared to reported net loss of $164 million in the year‐ago quarter. Marriott CEO Anthony Capuano says ‘we experienced significant progress in global RevPAR1 recovery in 2021 despite the emergence of new variants and ongoing headwinds from the global pandemic.’

FINANCE & MARKETS:

The ONS has reported this morning that the CPI in the UK rose from 5.4% in December to 5.5% in January. It reports that ‘the largest upward contributions to the change in the CPIH 12-month inflation rate between December 2021 and January 2022 came from clothing and footwear, housing and household services, and furniture and household goods.’ It adds ‘these were partially offset by large downward contributions to change from restaurants and hotels, and transport.’ On a monthly basis, CPI fell by 0.1% in January 2022, compared with a fall of 0.2% in January 2021.

Sterling mixed at $1.3550 and €1.1933. Oil down at $93.34. UK 10yr gilt yield unchanged at 1.58%. World markets better yesterday on eased Russia tensions. London set to open up around 16pts as at 7am.

For comments on employment levels, see Pubs & Restaurants above.

RETAIL WITH NICK BUBB:

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