Current trading; who are the winners & losers?

September 22 2016

Background – costs:

  • There is little inflation but 0% LfL won’t be enough to hold margin
  • Because what inflation there is, is the ‘wrong sort’
  • Utilities are OK but wages (esp. National Living Wage) are a problem
  • Occupancy costs & F&B costs are benign – but the latter will rise as Sterling falls

Outlook for margins:

  • Don’t worry, say some Brexit supporters, inflation won’t resurface, margin will take the strain
  • To operators, this is more of a problem than a solution
  • Passing on price rises has been tough – but there could be a concerted push in this direction
  • In the absence of price rises, LfL growth will be necessary

Late summer trading:

  • Weather was good – here
  • But overall trading was sluggish – here – August was +0.6%
  • We’ve since heard Shepherd Neame is doing 8.2%
  • M&B has chipped in with 1.8% (incl. 3.7% for drink)

So who, then are the losers?

  • It’s worth saying the Coffer Peach Tracker didn’t include the August Bank Holiday
  • This was very good meaning PLC updates could in aggregate exceed the ‘average’
  • Wet sales were good, London was good
  • Retailers maintain the High Street was reasonable but retail parks were not
  • Casual diners look as though they are lining up amongst the losers
  • Ed’s (per Sky) is looking for cash and others with tired brands may also be struggling

Money, mouth etc.

  • Pubs are currently > casual diners & there’s less of an over-supply problem with the former
  • New entrants have more energy etc. than incumbents
  • Established, non-vibrant casual diners are in the wrong quadrant
  • If they are over-represented on retail parks, then that won’t help, either