Fuller’s, CCH, BrewDog, confidence, flight disruption, labour etc.:

A DAY IN THE LIFE:

It’s very quiet.

Indeed, it feels like Christmas week. It’s chilly, low single digits in York in the mornings this week, 12 degrees in the afternoon and today could be Christmas Eve, given the volume of out-of-office replies and the ghostly silence out there.

But anyway, we’ll push on. Here’s the news:

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QUESTION OF THE WEEK?

Question of this week:

What will happen to the delivery market now that restaurants are open again, times are getting hard and there may be some discounting?

PUBS & RESTAURANTS:

Cost of living crisis:

Not new news but, keeping it to the fore, Labour has warned of a ‘cost of living tsunami’ as families face price rises of up to 50 per cent on everyday grocery items. Charities say the increase will see more of the poorest families turn to food banks as households struggle with the brunt of the cost of living crisis.

Anti-poverty campaigner Jack Munroe has suggested that inflation for the poorest 20% of people is higher than for everyone else. The ONS believes that this is not entirely the case. There appears to be some conflating between the impact of absolute increases in food prices in general and the specific impact on people who are cash-strapped to begin with. The IFS says the rise in domestic energy prices alone means that inflation for the least affluent decile in society is around 14%, compared with 8% for the richest.

The RAC reports that petrol and diesel prices yesterday hit new highs on the back of comments that the EU was to ban Russian oil imports.

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The latest BRC Nielsen Shop Price Index has shown that shop prices grew at their fastest rate in over ten years last month. Retail price inflation was 2.8% in May, its highest since July 2011. The number is still materially below CPI.

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The Bank of England yesterday reported that credit card borrowing is rising at its fastest rate in 17 years, at up 11.6%. The number is ahead of inflation and may show that consumers are plugging the gap (between price rises and their incomes) by unsecured borrowing.

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Labour & staffing issues:

UK Hospitality has ‘launched a nationwide hospitality workforce strategy to nurture cooperation between industry stakeholders and boost recruitment and training for a new generation of skilled hospitality staff, plugging the sector’s 170,000 jobs gap.’

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WFH.

Construction advisory company Glenigan has said that ‘after a dramatic downturn during the pandemic, new private office construction activity is continuing to stage a spectacular recovery.’

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New openings:

CAMRA reports that just over seven new pubs opened every week in the second half of 2021, which the organisation described as ‘encouraging’. However, Nik Antona, CAMRA chairman, cautioned ‘With the cost of living crisis affecting consumers, and the cost of business crisis facing our pubs, brewers and cider makers, we are really concerned that this positive news from our 2021 figures will turn into a nightmare report for 2022’.

Business confidence:

Lloyds Bank’s monthly barometer shows that businesses are increasingly confident that they can use inflation to rebuild their margins. The barometer found that 60% of the companies surveyed in the past month said they planned to raise prices in order to protect margins, due to the increasing cost of supplies, while 16% said they planned to increase workers’ pay by 4% or more.

COMPANY NEWS:

BrewDog has reported total revenues up by 21% to £286m in the year to end-December 2021. The company reports a £5.5m operating loss for the year, down from a £6.8m loss in 2020. The company reports it has invested £13m in unit expansion, with seven new bars and two new hotels during the year.

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Coca Cola HBC’s Chair of the Remuneration Committee, Charlotte J. Boyle, has written to shareholders providing ‘some important context in relation to our approach to executive remuneration.’

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Fuller’s has announced that it has ‘successfully completed the refinancing of its Group debt facilities of £192 million, which were due to mature in February 2023. The new debt facilities consist of a £90 million term loan and a £110 million Revolving Credit Facility provided by a syndicate of seven banks.’

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The Hard Rock Café is to open in York on Coney Street in a site formerly occupied by TK Maxx. The multi-level York venue in development will feature a “state-of-the-art café featuring Hard Rock Café’s one-of-a-kind blend of music, entertainment, iconic merchandise and authentic American food and drinks”.

The MCA reports that Franco Manca and German Doner Kebab (GDK) have partnered with Just Eat for Business, in order to capitalise on the return of workers to the office.

Burleighs Gin has launched a new Raspberry Edition Gin, expanding its portfolio. The spirit can be drunk on its own, with a tonic or as a base for cocktails.

Flexible workforce app Stint is experiencing record demand as hospitality venues across the UK prepare for the Platinum Jubilee Bank Holiday. The platform, which connects businesses around the country with students who perform simple tasks during short, flexible shifts.

B&M says UK LFL sales have been down by 13.0% on last year, shares drop 9%. Yes, tough comps. Perhaps, should have been expected. But tell that to the market.

HOLIDAYS & LEISURE TRAVEL:

Holiday disruption:

Senior aviation figures warn that Europe’s airports face ‘a big challenge’ to cope with passenger numbers this summer. They blame not only staff shortages but continuing Covid restrictions, the war in Ukraine, the boom in leisure travel and passengers arriving at airports unprepared to display documents, and they warn UK travellers face an additional impact at overseas borders due to Brexit.

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Jet2 CEO Steve Heapy has told Travel Weekly that current travel delays “will improve” as the industry deals with staff shortages. He insists the current situation is “as bad as it will get”. Heapy said ‘these issues are temporary. We are very optimistic for the future. Let’s get customers in and give them a fantastic experience.’

Recovery:

ACI Europe reports that air passenger numbers in Europe are set to rise faster than previously forecast, with passenger numbers returning to 78% of 2019 levels this year, having previously forecast a return 10 percentage points lower at 68%.

Staffing issues.

Barclays Corporate Banking has reported that staff shortages continue to be a major problem for the UK’s travel sector. It’s March 2022 report, based on surveys with 504 travel industry businesses, suggests that there is 37% of respondents believe staffing and recruitment was the “greatest disruptor to business”, on a par with travel restrictions.

Aparthotel group Adagio is opening seven new sites in 2022, including its second property in Scotland later this year.

Travelodge has announced that it plans to open six UK hotels in 2022, including the group’s first new build budget-luxe design hotels, and a franchise flagship hotel in Dublin. Locations include two sites in London at Docklands and Wimbledon and the group’s first hotel in Hexham.

FINANCE & MARKETS:

The Bank of England yesterday reported a material drop in net mortgage borrowing in April. A net £6.4bn was lent in March, dropping to £4.1bn in April. Mortgage approvals for house purchases fell from 69,500 to 66,000. Re-mortgage approvals fell from 48,700 to 47,800.

Knight Frank says ‘activity among purchasers is ebbing as the cost of living squeeze shrinks the pool of buyers. Rates on certain products have doubled in the past twelve months and there is a real sense of urgency among many borrowers who sense they must act soon or reassess what they can afford.’

The Telegraph reports that ‘the UK lagged behind France in luring foreign investment again last year in a sign that Emmanuel Macron’s efforts to entice deals through pro-business policies are having the desired effect’. The Telegraph says ‘France stole the UK’s European investment crown in 2019 after Macron went on a charm offensive to woo businesses after Brexit.’

Sterling mixed at $1.2582 and €1.1741. Oil sharply lower at $116.03. UK 10yr gilt yield up 13bps at 2.12%. World markets mixed yesterday with London set to open up around 28pts as at 6.30am.

FORTHCOMING NEWS:

Short week & nearly over. Next week is only a little more active with City Pub Group holding its AGM on the Wednesday and Fuller’s full year numbers on the Thursday.

RETAIL WITH NICK BUBB:

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