Langton Capital – 2022-03-23 – Tasty, Saga, inflation, income levels, energy, RBG, Budget & other:
Tasty, Saga, inflation, income levels, energy, RBG, Budget & other:A DAY IN THE LIFE: It’s the two-year anniversary of the PM’s ‘Stay at Home’ speech. Although we’ve had no serious personal losses over the Covid period – and these things need to be put in perspective – we’ve had no chance to mourn our office plants (that died, let’s face it, of neglect) and, more importantly, nor have we been able to properly say goodbye to all of the dozens of carefully collected bottles and cans of beer that readers had been kind enough to ping us in the months leading up to the WFH diktat. They all went the same way as the office biscuits, the packets of noodles and emergency powdered milk because, like many people, we didn’t think we’d be seeing the inside of our London office for the last time in 6mths back two years ago and, as a result, every single can and bottle of beer passed its sell-by day and, and this does really hurt, all of it is going to have to go down the sink. Nobody to mourn the powdered milk and still, we’d got the beer for ‘decorative purposes’, so no real harm done. And, as mentioned earlier, we need to keep a sense of perspective. No personal losses and at least we turned the fridge off. On to the news: LANGTON EMAIL: The Free Email is now written in short form. Extended versions of many stories are in the Premium Email. Reply to this email if you would like to upgrade. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email or to comment on the new format. Prices for the Premium, unchanged for 2yrs, are £295 for one subscription, £495 for multiple, both plus VAT. Reply to this email to order & request invoice. Or sign up for easy in, easy out monthly option HERE PUBS & RESTAURANTS: Disposable income: Fuel prices have reportedly stabilised for the first time this month, with petrol at nearly £1.67 a litre and diesel at £1.79. The RAC said the settling of prices could be an indication that retailers may have ‘finished’ passing on their higher wholesale costs to customers. Further food price rises could be in the offing as fertiliser prices are soaring, with the increase being driven by numerous factors including: reduced supplies from Russia and Belarus, disruptions to the supply chain, a China export ban and a Canadian rail strike. • See premium. Reply to this email to upgrade. The MCA reports that Lumina Intelligence’s Food to Go Market Report shows that eight out of nine major food to go brands have raised the price of their cappuccinos over the past two years. Between Q1 2020 and Q1 2022, the following brands increased cappuccino prices by: Burger King +58.2%, KFC +50.3%, Starbucks +18.4%, Gregg’s +7.9%, Pret A Manger + 3.6%. Higher energy costs: A poll undertaken by trade bodies UKH, the BBPA and the BII has found that ‘76% of businesses are mitigating skyrocketing energy costs by reducing their gas and electricity usage and raising prices, while 38% have cut their trading hours.’ The poll finds that ‘average energy price increases of 95% are the latest hurdle the hospitality sector must negotiate as it struggles to recover from the devastating effects of Covid. The others are impending business rate rises, rent increases, chronic staff shortages, rising raw goods costs, plus the prospect of a return in April to 20% VAT for the industry.’ • See premium. Reply to this email to upgrade. The Budget: There are hopes that chancellor Rishi Sunak will delay either the introduction of higher rates of National Insurance or may delay putting up VAT on non-alcoholic drinks and food sold in the hospitality industry. He may, in an ideal world, do both. But, whichever way it goes, we will find out later today. A bit of context: It was exactly two years ago today that PM Boris Johnson told people in Britain they must stay at home. The market: Lumina Intelligence reports that the quick service restaurant market should resume its growth ‘led by the sandwich & bakery, coffee shop/café and fast-food segments.’ It says ‘service-led restaurants will take longer to recover but growth will improve from pre-pandemic levels.’ Lumina reports that ‘the fast-food and takeaways segment is expected to see compound annual growth of +2.4% between 2022-24. This will result in the value of the segment increasing from £16.9bn in 2022 to £18.2bn in 2024. This will give it a market share of 19% and see it gain the biggest share of the total eating out market to 2024, as it benefits from improving food quality and standards, continued outlet expansion and ability to tap into other routes to market including delivery and drive thru.’ • See premium. Reply to this email to upgrade. Bloomberg’s weekly Pret Index headlines ‘Coffee Sales Slow in London As Infections Rise’. It says ‘demand…fell slightly in London’s financial & shopping districts last week, ending several weeks of growth.’ Covid infections on the rise. Says sales at 86% of pre-covid level (helped by inflation & 12.5% VAT). • See premium. Reply to this email to upgrade. Other news: Only A Pavement Away’s ‘Backpack Project’ will provide basic essentials and signpost careers in hospitality for people leaving prison. Chef Gordon Ramsay has said the pandemic has ‘wiped the slate clean’ of ‘crap’ restaurants. Ramsay said the pandemic had taught those working in the industry to ‘raise their game’. The MA reports that almost 11.5m pints of draught beer and cider were sold in pubs across the UK on Saturday 19 March as punters watched the Six Nations tournament. The average pub served 436 pints, an additional 6% volume compared to pre Covid data and a 22% increase in volume, in contrast to a non-rugby weekend. Inflation: The ONS has reported that CPI in the UK rose from 5.5% in January to 6.2% in February. This is the highest level in 30yrs. Estimates were for around 5.9%. The ONS says ‘on a monthly basis, CPI rose by 0.8% in February 2022, compared with a rise of 0.1% in February 2021. This was the largest monthly CPI increase between January and February since 2009.’ It says ‘price changes in the restaurants and hotels division’ impacted the numbers, ‘driven by accommodation services.’ The CBI has reported that the proportion of British manufacturers expecting to raise their prices over the next three months has hit a new record. The CBI began tracking such things in 1975. It says the balance of manufacturers expecting to raise prices was +80 vs +77 in February. COMPANY NEWS: Tasty plc has reported full year results for the 52 weeks ended 26 December 2021 saying that revenue was £34.9m (2020: £24.2m). This is ‘an increase of 44% year-on-year with 33 weeks dine-in trading, driven by strong sales post re-opening despite weaker trading for the peak December period than anticipated, due to the onset of the Omicron variant.’ Tasty says adjusted EBITDA1 (pre IFRS 16) was £3.9m (2020: loss £1.5m) and there was a profit after tax for the period of £1.2m (2020: loss of £12.7m). Tasty says it had cash at the year-end of £11.0m. it adds that ‘after allowing for deferred HMRC payments, creditors and bank loan the Group’s net cash position was approximately £6.8m.’ It says it is currently trading from 50 of 54 restaurants. • See premium. Reply to this email to upgrade. Revolution Bars is to raise wages above the NMW. It says ‘as part of the Group’s ‘fair day’s pay for hard day’s work’ pledge, Revolution Bars Group has implemented wage enhancements that exceed the new increased National Minimum Wage, due to be introduced in April.’ • See premium. Reply to this email to upgrade. HOLIDAYS & LEISURE TRAVEL: Saga plc has reported full year results for the year ended 31 January 2022 saying it has turned in a ‘resilient performance, delivered against [a] challenging backdrop.’ The company reports an underlying loss of £6.7m (against an underlying profit of £17.1m to Jan 21. It says it has net debt of £729m, down from £760m in the prior year. • See premium. Reply to this email to upgrade. Jet2 and Jet2holidays research shows that customer confidence about travelling abroad is at its highest point since the start of the pandemic. Seven in ten say they are confident in booking and travelling on holidays now that restrictions are ending; compared to just three in ten in January 2021. Carnival Corporation yesterday reported Q1 numbers saying that it had generated a U.S. GAAP net loss of $1.9 billion and adjusted net loss of $1.9 billion for the first quarter of 2022. The company says it ended Q1 with ‘$7.2 billion of liquidity, including cash, short-term investments and borrowings available under the company’s revolving credit facility.’ CCL is able to say that, ‘as of March 22, 2022, 75% of the company’s capacity had resumed guest cruise operations.’ It says ‘the company expects to have each brand’s full fleet back in guest cruise operations for its respective summer season where it historically generates the largest share of its operating income.’ It adds that it ‘believes monthly adjusted EBITDA will turn positive at the beginning of its summer season.’ A green tinge to the high-oil-price crisis. The IEA has called on companies to deprive Russia of oil revenues through temporarily cutting their business flying by 40%. Replacing two in five business flights with virtual conferencing would lessen demand by 260,000 barrels per day in the short term. Business travel reduction combined with the other nine recommendations in the report would help advanced economies cut oil demand by a total of 2.7 million barrels a day over the next four months. Crédit Agricole has introduced a €5 charge for withdrawals made with UK-issued credit and debit cards as well as imposing a new €18 flat fee on any bank transfers coming from Britain. More European banks are expected to introduce similar fees, according to various European media. Transport secretary Grant Shapps has said the government is ‘seriously considering’ whether to continue to work with P&O Ferries after it sacked 800 seafarers without notice via Zoom. Shapps said to the House of Commons ‘I expect many customers, passengers and freight will quite frankly wish to vote with their feet and where possible choose another operator.’ P&O has said it will pay £36.5m in compensation to sacked workers. P&O has meanwhile said that the sacking of almost 800 staff without warning was a “last resort” to save the company. FINANCE & MARKETS: The ONS has reported that CPI in the UK rose from 5.5% in January to 6.2% in February. This is the highest level in 30yrs. Public sector borrowing figures, released yesterday, have been interpreted as both higher than expected on the one hand and as giving chancellor Rishi Sunak the flexibility to do something to alleviate the worst of the cost of living crisis on the other. The Resolution Foundation says the chancellor has some room to manoeuvre. It says Mr Sunak ‘should take this opportunity to provide emergency income support to families through this cost of living crisis, starting with a £9bn boost to working-age and pensioner benefits.’ Ratings agency S&P Global Ratings suggests that parts of the London property market may be overvalued by as much as 50pc when property is compared to its long term relationship with earnings. The US is easing some Trump era tariffs on UK steel & aluminium. Sterling up at $1.3285 and €1.2035. Oil lower at $115.86. UK 10yr gilt yield up 9bps at 1.70%. World markets better yesterday and London set to open some 40pts higher as at 7am. RETAIL WITH NICK BUBB: • See premium. Reply to this email to upgrade. |
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