Domino’s Pizza, Rank, Marston’s, WFH, supply, inflation & other:

A DAY IN THE LIFE:

Setting precedents can be a tricky thing as I now find that I have to bribe the dog to go outside to do his business and also bribe him to come back in, even when it is siling down outdoors.

Which is what it is but, at the end of the day, what does he think the alternative is?

He doesn’t really think at all, of course, but would he really burst his bladder or drown in the rain because he didn’t get his customary half a Dentastix?

Sadly, the answer to that is the obvious one. Yes, he would but, before we humans laugh at his antics quite so much, maybe we should observe the actions of our own politicians half of the time, which seems to follow a pretty similar trajectory.

Anyway, enough of that. On to the news:

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PUBS & RESTAURANTS:

Working from home. City AM reports that ‘Londoners are flowing back to the office in their droves as the pull of the city centre draws workers back in.’ It suggests that the number of people going into London offices climbed 31 per cent over the last month. Quoting research from office rental company IWG, it says ‘22 per cent more office trips occurred in the City of London in September compared to August.’ There is some evidence that commuters are staying home Monday and Friday and working Tuesdays, Wednesdays and Thursdays (which produces an unfortunate mnemonic).

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Labour. Restaurant Dive reports on the labour shortage in the US saying that ‘many restaurants have trimmed their hours or adopted efficient technology to survive the labour shortage.’ Moody’s says this may not be enough and it predicts that restaurants will be “forced to increase wages to attract the staff they need.” Official data in the US shows that the ‘quit rate’ for hospitality workers, at 6.8% per month in August, was running at more than twice the national average rate of 2.9%.

Inflation. Ranjit Singh Boparan has said that the cost of chicken is likely to rise by more than 10%. He tells the Guardian that food in the UK is currently ‘too cheap’. Boparan has called for a “reset” on pricing to reflect current costs. he asks ‘how can it be right that a whole chicken costs less than a pint of beer? You’re looking at a different world where the shopper pays more.’

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Commenting on inflation in the US, Moody’s says ‘once consumers begin to balk at the higher prices, losing patience with longer waits or not having their favourite menu item, inflation will exert pressure on restaurant margins.’ Elsewhere, the Fed says that consumer prices rose by 0.4% in the month last month and hit 5.4% on an annualised basis. Grocery prices were up by 1.2% in September.

Chancellor Rishi Sunak says that ministers are doing “absolutely everything we can” to fix supply chain issues in the UK.

Hospitality powers economic growth. The ONS reported yesterday that the UK economy grew by 0.4% in August. It says that the arts, entertainment and recreation sectors grew 9%, with sports clubs, amusement parks and festivals particularly strong. There was also more demand for hotels and campsites. The ONS is now estimating a marginal contraction in July (down 0.1%) compared with earlier estimates of plus 0.1%.

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Data from NPD Group in the US suggests that the fast casual sub-sector of the restaurant market is recovering the most rapidly in the sector as a whole. It says that in the year to August, physical visits to fast-casual restaurants were up 8%. NPD says ‘in the quarter ending June 2020, at the height of pandemic lockdowns and restaurant restrictions, fast-casual visits were down 23% compared to the prior year, according to NPD’s daily tracking of the U.S. restaurant industry.’ It adds ‘fast-casual restaurants have capitalized on the lessons they learned during the pandemic.’

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COMPANIES & OTHER NEWS:

Domino’s Pizza Group has updated on Q3 trading saying that ‘trading momentum continues with strong growth in sales and order count.’ It says it is making ‘good progress on strategic objectives’ and adds that system sales in the quarter were up by 9.9% with LfL sales up by 8.8%. The company says that, ex the benefit of lower VAT, LfL system sales were up by 6.4% in the quarter (having been up by 5.5% at H1.) DOM says ‘total orders continued their positive trend and grew 9.5% in the period, driven by collection orders rising 40.3%, now at 82% of 2019 levels, lapping a period which was significantly impacted by Covid restrictions.’ More on outlook, end of low VAT, supply issues etc below.

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Marston’s shares were little changed yesterday on the company’s trading update. CEO Andrew Andrea tells The Telegraph that some supplies have been an issue. He says ‘there were a couple of days where we had an issue with chicken pie supply. We had a bit of a shortage. We didn’t run out of pies altogether, but we had to source alternatives and offer people alternatives.”’ Mr Andrea says there are “pockets of disruption” to its supply chain but adds that the company is coping well. He says ‘we are watching it [supply] like a hawk and the key thing is to be nimble here.’ Regarding price, the CEO says that the company has edged its prices up by around 10p a drink and 20-30p a dish on food. Mr Andrea says ‘you’ve got to strike that balance because if you’re greedy, you’ll get found out and customers will just stay at home, and we certainly don’t want to encourage that. There has been some
quite material price taking in the sector and certainly in London, we’re seeing some eye-watering prices for a pint of beer.’

Black Sheep Coffee has launched its first franchise, operated by and located in the AC Hotel in Birmingham.

LVMH reports sales of €44.2 billion in Q3, up 46% compared to the same period in 2020. LVMH said it had not noticed a change in consumer behaviour in China.

Law firm Leigh Day has launched a claim on behalf of Amazon delivery drivers over their employment rights that it says could result in millions of pounds in compensation. Lawyers estimate the action could mean a total bill of £140m.

Peter Wilson, from Cory Bros, said people should order items in a “timely fashion” to ensure they arrive in time, as UK ports face delays.

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In the US, The Job Openings and Labor Turnover Survey from the U.S. Bureau of Labor Statistics shows that workers in the sector quit their jobs at a rate of 6.8% in August, which is more than double the national rate of 2.9%. 

Coco di Mama has partnered with Sainsbury’s to trial a range of its premium grab-and-go products across 15 London convenience stores, including chicken Milanese on sourdough; caprese multigrain; and chicken Caesar salad.

In the US, BurgerFi is set to acquire Anthony’s Coal Fired Pizza and Wings for $161.3 million. BurgerFi will acquire the pizza chain’s 61 units from the private equity firm L Catterton.

LEISURE TRAVEL & HOTELS:

STR reports that trends in the US hotel sector show that operations are shifting to accommodate smaller labor pools, using the mantra ‘less is more done better’.

MSC Cruises has added a second ship for its 2023 World Cruise, the MSC Magnifica, with the two ships set to carry more than 5,000 passengers between them. 

OTHER LEISURE:

The Rank Group Plc has reported on Q1 trading which it says is in line with expectations. The company reports that group revenue, at £163.1m, is up 69% on last year with casinos up 209% and bingo up 41%. The company also gives 2019 comps, in which case 2021 casinos are down 20% and bingo is down 22%. More on London, margins, costs & outlook below.

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Sportech, which tendered to buy back some of its own shares back in August, has updated on the now-closed offer saying that it was offered 72.6% of its own shares back at 40p. This will be scaled back, as pre-announced, to some 47% with some rounding up going on. The company says that ‘following the Cancellation, the Company’s issued share capital will be 100,000,000 Shares and the total number of voting rights in the Company will be 100,000,000.’

Apple reported that it will make 10 million fewer iPhone 13s than it had initially planned, sending the value of the company’s shares down by 1.2%. The news comes as  a global shortage of semiconductors impacts all industries that need computing power.

FINANCE & MARKETS:

Commenting on average earnings, the NIESR says ‘the growth rate in average weekly earnings including bonuses in Great Britain decreased in the three months to August to 7.2 per cent compared to a year ago, down from 8.3 per cent in the three months to July. This is in line with the 7.1 per cent we forecast last month.’ It adds ‘excluding base effects, the growth in average weekly earnings was at 4.2 per cent in the three months to August, unchanged from the three months to July.’

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The IMF has warned that the emergency support provided by central banks and finance ministries during the pandemic has left the world vulnerable to another financial crisis. It says there is evidence of greater financial risk being taken in the financial markets.

Sterling mixed at $1.3664 and €1.1787. Oil little changed at $83.79. UK 10yr gilt yield down a little at 1.10%. World markets better yesterday and London set to open around 34pts higher as at 6.45am.

RETAIL WITH NICK BUBB:

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