Tipping points, normality, Hostmore, DP Eurasia, city centres & other:

A DAY IN THE LIFE:

My app said there was a 4% chance of rain yesterday…

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…on to the news:

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QUESTION OF THE WEEK?

What will win out, premiumisation or the consumer hunt for value? Or will the market polarise between the two?

Answer of the Week comes tomorrow, Friday, so comments please in by close, Thursday.

RETURN TO ‘NORMALITY’ STALLED?

Introduction – straws in the wind. But a lot of them:

• Google’s mobility stats suggest that, although it was a sample of only two dates, increases in mobility in the UK may have stalled.

• Springboard suggested that footfall had fallen in the UK week on week.

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PUBS & RESTAURANTS:

City centres:

Interesting to note that M&S has announced that it will shut 32 more stores as it shifts away from town centres.

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Levels of business.

ClearSight has updated on the recovery of the UK hospitality market, saying that ‘rail & bus travel is close to pre-pandemic levels in terms of participation but not yet journey volumes.’

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Pub accommodation:

Stay in a Pub has reported ‘that 44% of all bookings made in April and May have been from overseas. European visitors are coming from Germany, Belgium Switzerland, and the Netherlands, and significant numbers are traveling long haul from the US, Canada, and Australia.’

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Potential travel problems:

Commenting on the RMT vote for a national strike this summer, UKHospitality CEO Kate Nicholls says ‘a national rail strike would further jeopardise hospitality businesses working hard to rebuild following the pandemic, in the face of rising costs and a fall in consumer confidence.’

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Food & farming:

Supply issues – a lack of labour, transport or other difficulties, for example those faced in getting grain out of Ukraine – have been responsible for inflation rather than an excess of demand. Demand, rather than supply, will be clobbered by rising interest rates.

In the meantime, a House of Commons committee has reported on Labour Shortages in the Food and Farming Sector, has concluded that labour shortages ‘caused by Brexit and accentuated by the pandemic’ have been impacting food supplies.

Inflation:

Petrol prices have hit a new high of 170.4p a litre with diesel hitting 181.4p a litre.

Menu evolution:

The Caterer reports that restaurants are cutting back on fried dishes and taking premium products such as scallops off the menu due to increasing costs. General manager of The Terrace restaurant in Yarmouth, Tom Fahey, said ‘ People love crispy deep-fried things, [but] it means you use a huge amount of oil.’

COMPANY NEWS:

DPEU says trading is in line:

DP Eurasia has updated on trading for the four months to end-April.

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Hostmore profit warning. Slower sales, lower margins:

Hostmore, which operates the Friday’s chain of restaurants in the UK, has updated on trading update for the 20 weeks ended 22 May 2022 and revised its guidance for FY22.

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McDonald’s UK and Ireland invests over £250m in restaurant redesign in the UK.

EG Group reports a £215.7 million net profit for the first three months of the year with the company claiming it is well placed to weather the current inflation and cost of living crisis. CEO Zuber Issa said ‘The strong performance in foodservice was supported by UK acquisitions from 2021 that contributed £32m of gross profit across the quarter…our belief [is] that food service represents the biggest opportunity for EG Group globally.’

SA Brain has put the freehold and leasehold investment of 99 pubs on the market for a price reflecting a NIY of 5.75%. The company has agreed to sell 95 of those assets in one property portfolio to Song Capital and partners.

Duration brewing has launched a £1m crowdfunding campaign to fund an immersive taproom and expansion at historic its priory site.

The Famous Grouse is launching a new premium spirit with a Sherry Cask Finish. The drink is billed as a ‘blend of festive flavours including chocolate, almonds, dried fruits and sweet spices’.

Surrey-based brewer, Big Smoke Brew Co, and Airport Retail Enterprises have announced the opening of two new independent craft beer and food destinations at Heathrow’s Terminals 3 and 5 this summer. The Oceanic in Terminal 3 and The Globe in Terminal 5 will serve Big Smoke’s core range of beers and gins.

Foodsteps has raised $4.1m in seed funding, led by Octopus Ventures, to expand its sustainability platform and attract new talent. Companies can upload recipes onto the platform, which has a database of 3,000+ ingredients containing impact information on each ingredient’s carbon footprint and provides recommendations on improving sustainability.

Majestic Wine has said that it expects to break all records in its sales of sparkling wines over the Jubilee weekend.

Trian, the largest shareholder in burger chain Wendy’s Co., is reported to be exploring options that could include taking over the whole company. Trian is controlled by Wendy’s chairman Nelson Peltz.

HOLIDAYS & LEISURE TRAVEL:

Travel Weekly reports that limited delays at airports are expected over the half-term and Jubilee bank holidays, despite a ‘narrative of disruption’ in the media being forecast. Travel Weekly’s source suggested delays at UK arrival halls next week should be manageable, but warned delays are likely this summer.

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The RMT has said that its demands for a pay rise are “not unreasonable.” It is possible that the largest rail strike in more than ten years will be upon us shortly. The union says that some of its members ‘are in the third year of a pay freeze this year.’

Travel Weekly has reported that Travel Counsellors has recorded its second-highest sales week in its history earlier this month.

OTHER LEISURE:

The sale of Chelsea FC has been given approval by the UK government following the proposed takeover by the Todd Boehly / Clearlake Consortium. The Premier League Board approved the proposed takeover on Tuesday.

Elon Musk yesterday tweaked his bid for Twitter. He is now pledging an additional $6.25 billion in equity financing to fund the deal. Mr Musk had suggested he could lower his bid.

FINANCE & MARKETS:

The ONS has reported that monthly number of house sales in the UK fell in April for the first time since the end of the stamp duty holiday. On the Market says that it is ‘clear the frenetic pace of the housing market has subsided.’

David Malpass, head of the World Bank, has warned that the war in Ukraine could cause a global recession. He says ‘the idea of energy prices doubling is enough to trigger a recession by itself.’

UK car production fell again in April by a further 11 per cent.

Fed minutes from its May meeting were in line with forecasts and still seem to suggest that future 50-bp rate hikes are ‘likely’.

Sterling mixed at $1.2569 and €1.1757. Oil price lower at $114.51. UK 10yr gilt yield up 2bps at 1.91%. World markets better yesterday. London set to open around 14pts lower as at 6.30am.

FORTHCOMING NEWS:

DP Eurasia reports today on its first 4mths’ trading. AG Barr’s AGM is Friday. See also Trading Statements on the right.

RETAIL WITH NICK BUBB:

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