Consumers, rates, WFH, costs, footfall, JDW, CPC, WYN & other:

A DAY IN THE LIFE:

I’ve been taking a quick look at NFTs (non-fungible tokens) and have decided that, as it says in the Book of Ecclesiastes (written around 2,500 years ago), there’s nothing knew under the sun.

Because, though the tech may change, the ‘let’s buy tulip bulbs’ mentality that we all seem to share, does not.

Anyway, I may well be in the process of failing to make a fortune but I’m relatively relaxed about that and there are real world problems out there.

Some very big ones, of course, but, at the more manageable end of the spectrum, I have a horrible feeling that, if it stays warm like this, the grass will soon need cutting. On to the news:

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PUBS & RESTAURANTS:

Business rates:

Trade bodies have responded to the new report, issued by the All-Party Parliamentary Beer Group of MPs, which called on the Government to ‘urgently address the business rate iniquity which is threatening the future of pubs and their communities while online giants continue to swerve the taxman.’ See yesterday’s email. UKH and the BBPA have both spoken out.

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The BBPA has commented on the widespread efforts across the pub industry to help those suffering the consequences of Russia’s invasion of Ukraine. It points out that a number of operators, including Hall & Woodhouse, Brewhouse & Kitchen, Brewdog, Carlsberg & Diageo are donating time, products or money to supplying aid.

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Working from home:

With the cost of living crisis grabbing the headlines, WFH (and even Covid itself) have taken a backseat but, all things considered, WFH could be one of the factors that continues to influence the sector after (hopefully) Covid, Ukraine and even the consumer squeeze are in the rear view mirror.

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Analyst Peter Backman comments on WFH saying that commuter numbers are down by 20-30% from pre-covid times. He said earlier in the pandemic that ‘this reduction in worker numbers has caused caterers to rethink their working models by reducing costs and increasing flexibility.’ He says that ‘responses to changes in commuting patterns are very noticeable – from the development of the Pret subscription model to the growth of delivery services, such as Deliveroo for Business, aimed at office workers.’

Shelley Sandzer managing director, Ted Schama, has said leasehold premiums are now ‘almost non-existent’ and the pandemic has given landlords a ‘greater understanding’ of restaurant business models.

Near term cost problems:

There is something of a cliff edge or brick wall or screeching halt, pick the metaphor to suit, coming up in April. Foodservice analyst Peter Backman points out that the sector is ‘going to have to cope with higher prices – in cases much higher prices – food and fuel (and labour) which account for about 80% of the sector’s costs.’ He says ‘and then there is an increase in the rate of VAT – from 12.5% to 20%. Not to forget the removal of the rent moratorium which means that some landlords will be knocking on doors demanding their unpaid rent be put right.’

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Rising prices are benefiting some companies. Agricultural supplies company Wynnstay says that its ‘fertiliser operations…have continued to experience one-off gains from the exceptional current trading environment that has been sustained into the current financial year.’

• Wynnstay says ‘market volatility across most commodities has persisted, with material price increases since the start of the calendar year.’ It says it has managed cost increases well and, as farm gate prices are rising, its customers are able to pay up for supplies. WYN says it ‘has managed these difficult circumstances well, and once again the Group’s broad spread of activities is proving a major strength. Farmgate prices have remained strong, enabling customers to absorb elements of this inflation, although higher prices are expected to curtail some demand.’

Prices on the march:

The Express and Star report that Marston’s has increased the price of a pint of beer by between 20p to 45p on average, in the past week. The price of a pint of beer has also increased at Wetherspoons, by between 10p and 20p – with the 20p addition being added to drinks at its London venues.

VAT:

Ahead of the Budget (tomorrow), JDW has criticised the current proposals to put VAT up again in just over a week’s time, with chairman Tim Martin saying that it ‘doesn’t make economic sense that food bought in pubs, restaurants and cafes attracts VAT of 20 per cent, when food is VAT-free in supermarkets.’

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Footfall:

Last week footfall rose in all town types, with an uplift in coastal towns that was double that in any other type of town centre, due to the good weather.

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Other news:

Night-time economy adviser for Greater Manchester Sacha Lord has said that the sector needs help bouncing back from its ‘perilous financial position’ in Wednesday’s Spring Statement. Pubs and restaurants are seeing difficulties across the board, from tax hikes, inflated price rises for produce and ingredients and surging energy costs, on top of existing Covid debt.

Data from Experian Catalist shows that the average price of petrol was 167p a litre on Sunday, compared with 166p on Friday, despite ‘plummeting’ wholesale prices.

The BBC reports that unions are set to push for pay rises of around 10% this year. Unison, the UK’s biggest union, urged Chancellor Rishi Sunak to fund an above-inflation pay rise in the public sector. And another union, Prospect, predicted ‘conflict’ with firms and the government if there were large falls in real-terms earnings.

Sky has partnered with PubAid to create a new programme to recognise and reward pubs across the country who support grassroots sport. Once enrolled, pubs will receive a free marketing pack of staff T-shirts and window stickers to help them shout about their support for the sports they are involved in.

COMPANY NEWS:

Wetherspoons chairman Tim Martin has told the MCA that the post-lockdown boom predicted by many has not yet materialised. Martin said ‘“Lockdowns were paid for by central banks printing money, which has led to severe inflation. Let’s hope governments copy Sweden’s approach next time. They stuck to the original pre-Covid plans, with better health outcomes than most.’

All UK free-range eggs will now have to be reclassified as ‘barn eggs’ due to outbreaks of bird-flu keeping birds inside for more than 16 weeks. About 55% of all eggs produced in the UK are free-range, says the RSPCA.

Pub company Portobello Starboard has announced that it has separately bought five pubs from The City Pub Group PLC and a further pub, the Grand Victorian pub in Worthing from Dominion Hospitality, an affiliate of Stellex Capital Management.

The City Pub Group says of the transaction that ‘these five pubs, which had a net book value of approximately £17.1 million as at April 2022 and recorded unaudited aggregate site EBITDA of £0.7 million for the year ended 26 December 2021, are being acquired by Portobello Starboard Limited for cash consideration of £16.2 million.’

In the US, Starbucks hopes customers will switch to reusable cups by 2025. The company aims to cut the amount of waste produced by its coffeehouses in half by 2030. Starbucks is expanding the reusable-cup program, and testing systems that will make the process easier and more convenient for guests.

The government has confirmed that pubs will be allowed to stay open until 1am for three nights over the Queen’s 70th anniversary.

MatchPint – the fan engagement platform for venues, brands and sports fans – has announced a global rebrand to FANZO after 10 years of operation.

The Issa brothers are said to be in the running for Boots.

HOLIDAYS & LEISURE TRAVEL:

Angela Day, founder and CEO of Affordable Car Hire, has put the company into voluntary liquidation. Day said ‘ We worked tirelessly to try and get all the refunds through but there are still some agents who haven’t had their money back because we just could not get it from some of our suppliers.’

FINANCE & MARKETS:

Sterling mixed at $1.3122 and €1.1941. Oil price up around $8 at $119.30. UK 10yr gilt yield up 11bps at 1.61%. World markets mixed to down a shade yesterday. London set to open down around 4pts as at 7am.

RETAIL WITH NICK BUBB:

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