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Deliveroo departure, Rank profit warning, strikes, trading, inflation etc.:

A DAY IN THE LIFE:

We’ve got a new puppy and I know, idiot, right?

But a dog kind of comes with the territory and we’re looking on this one, like the dogs before her, as something of a project, hopefully a J-curve, where the downward bit is in your face (and on your carpet) and the hoped-for rewards are a little bit further down the line.

Anyway, she’s nine weeks old, has well and truly come out of her shell, is being socialised bit-by-bit and, over the weekend, she learned that, as I was wearing short trousers for the first time in her life, I had legs.

In fact pretty much one at either side of me, she discovered and, as she’s going with whatever comes naturally to her, she’s been biting my legs ever since presumably a) to find out what they taste like and b) to see whether they come off if you shake them hard enough.

All of which is very amusing. At a distance, that is and this has been a voyage of discovery for both of us as I’ve learned that, whilst I’m happy to talk the talk, I’m certainly not above running away from two month old girls.

Anyway, another full week in the offing, so let’s move on to the news.

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PUBS & RESTAURANTS:

Cost of living crisis.

Seeing the world as others see it. Tesco updated on Friday. CEO Ken Murphy repeated that ‘the market environment remains incredibly challenging’. He says the firm has a ‘laser focus on value.’ This, at least, should keep a little money in consumers’ pockets and could be helpful for hospitality spend. Every little helps.

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Treasury minister Simon Clarke has said that employees should not expect wages to rise as rapidly as prices. This a) may be true, b) will be necessary if inflation is to be killed off before it goes into a spiral and c) will not be good for discretionary spend.

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A No Interest Loan Scheme, backed by the Treasury, is to be rolled out after a trial in Manchester.

Trading & near term outlook:

KAM has undertaken a snap poll about consumer intentions during the summer. It says ‘the results…are good news for hospitality’ in that 79% of respondents will ‘definitely visit a restaurant over the Summer (19% maybe)’ and 86% will definitely visit a pub (12% maybe).’

CGA has reported that drink sales were almost back to 2019 levels (they were down just 1% or so) in the week to 11 June. The week includes the Sunday of the Jubilee Bank Holiday(s) weekend, which was not strong. Given what inflation has done over that period, real sales are down and volumes will be materially lower. It says that cider sales were up 6%, beer was flat, spirits were up 5%, soft drinks were down 4% and wine sales were 17% lower.

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Kate Nicholls, CEO of UKH, is reported as saying that there has been a surge in bookings for UK-based holidays in the wake of chaos at airports. She says ‘we are not sure if this was a direct response to the travel chaos and the difficulty in travelling abroad or the cost of living squeeze or people realising how good the UK is after the platinum jubilee.’

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Travel weekly warms to the same theme when it says ‘travel agents say consumers remain nervous about flying this summer amid fears staff shortages and airline cancellations will continue into this summer, with some reporting booking alterations and shifting demand.’

Costs & confidence:

The London Chamber of Commerce and Industry has said that businesses in London may be “overwhelmed” as they are impacted by higher interest rates and energy costs and labour shortages. It has called on the Government to reverse the National Insurance rise of 1.25 percentage points.

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Rail strikes:

The Caterer reports that the national rail strike next week is leading to a wave of booking cancellations for the hospitality industry. Network Rail said that only around half of Britain’s rail network will be open on strike days on 21, 23 and 25 June with a “very limited” service running on lines open from around 7:30am until 18:30pm.

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Transport minister Grant Shapps has said it is not down to the government to step in to try to settle this week’s train strike. He called the RMT’s request for a meeting with him a ‘stunt’. Opposition parties have accused the government of standing by in the expectation that a strike will offer up political advantages. The first of three strikes is planned for tomorrow.

COMPANY NEWS:

Deliveroo CFO to leave the company:

Deliveroo has announced that CFO Adam Miller is to step down as a director of the company. He says it ‘has been a privilege to work for Deliveroo. Now is the right time for change, both for me and Deliveroo.’ The company has announced that it has appointed Scilla Grimble as Miller’s replacement. It says ‘Scilla, who is currently Chief Financial Officer at MoneySupermarket.com Group plc, is expected to commence her appointment by no later than June 2023.’

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Other news:

JD Wetherspoon is investing £2.4m in a new pub at Birmingham New Street station. The pub will be called  The London and North Western and is set to open on November 21. CEO John Hutson comments ‘we are looking forward to opening our new pub and believe it will be a great addition to the station.’

D&D London is set to open its first Birmingham restaurant, located at 103 Colmore Row, the city’s tallest office building, in October 2022. The restaurant will offer 360-degree panoramic views across Birmingham, and will comprise an 88-cover restaurant, 24-cover bar and 12-cover private dining room.

Starbucks China CEO Leo Tsoi has reaffirmed that the Seattle-based coffee chain views China as a key market and is targeting 6,000 stores in the country by the end of 2022.

Whitbread’s Brewers Fayre will open its first new site in 5 years. The 357-cover pub will be located in Milton Keynes and called The Willen Dragon.

The MA reports that Battersea-based Doghouse Distillery’s biggest issues are currently energy and fuel prices, despite a huge uptick in sales since Easter. Founder Brendan Saunders said he had seen an ‘unheard of’ 20-30% increase in the costs of goods that he put down to energy prices. The problem was worsened as the producer was selling to venues which were selling to consumers who were looking to ‘penny pinch’ and avoid price rises due to the cost-of-living crisis.

German drinks firm Krombacher Group has announced plans to take over Heil- und Mineralquellen Germete GmbH, effective 1 August, for an undisclosed fee. Heil- und Mineralquellen Germete GmbH, which was founded a century ago, in 1922, bottles around 200 million litres of mineral water and soft drinks each year.

HOLIDAYS & LEISURE TRAVEL:

STR reports that rising interest rates in the US threaten to dampen capex numbers across the hotel industry.

Tui has warned that services at Gatwick will be ‘significantly affected’ by next week’s national rail strike. Gatwick is recommending customers use alternative travel to and from the airport on these dates and allow extra time for journeys.

Heathrow’s schedules have been ‘trimmed’ due to a baggage handling failure on Friday at Terminal 2. The problem was reportedly solved yesterday evening. Heathrow says ‘the technical issues affecting baggage systems have led to us making the decision to request airlines operating in Terminals 2 and 3 to consolidate their schedules on Monday 20 June.’ It adds ‘this will enable us to minimise ongoing impact and we ask that all passengers check with their airlines for the latest information.’

Per Hotstats, European luxury hotels are back to producing profit at the almost same rate as 2019, with March 2022 GOPPAR of €66 only €4 off its March 2019 number. In London, March 2022 GOPPAR was €131, the highest level it’s been since the pandemic.

Supercity Aparthotels has gained planning permission for a 55-room aparthotel on Edinburgh’s Forth Street and Broughton Street Lane.

OTHER LEISURE:

Rank Group profit warning. Trading bounce-back is ‘considerably weaker than expected.’

The group has updated on its expectations for the full year ending 30 June 2022, saying ‘as noted in the trading update of 21 April 2022, the Group had witnessed softer performance in our UK venues throughout Q3 and had entered Q4 with visit numbers down across our Grosvenor casinos.’

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Elon Musk, in a meeting with Twitter employees, hinted at potential job cuts if his $44bn takeover bid for the social media company is successful. Mr Musk has previously warned that  he may quit the deal if he is not given data about fake accounts.

FINANCE & MARKETS:

Economists are suggesting that base bank rates in the UK, currently 1.25%, could go as high as 3%.

Made UK has called on the Treasury to provide more support.

Rightmove has suggested that the growth in house price inflation in the UK could moderate from its current double-digit rate to around 5% by the end of the year. This will represent a reduction in real terms.

Sterling weaker at $1.2237 and €1.1626. Oil lower at $113.16. UK 10yr gilt yield down 2bps at 2.50%. World markets mixed on Friday. London set to open down around 5pts as at 6.30am.

FORTHCOMING NEWS:

Another relatively quiet week on the numbers front this week. Rank Group updates on full year trading today. Thereafter, Coca Cola HBC hosts its AGM on Tuesday and Chapeldown does the same on Wednesday. Naked Wines announces full year numbers on Thursday and Carnival Cruises reports Q2 numbers on Friday.

A bit more lively on the economics front. UK CPI and RPI numbers come out on Wednesday with Public Sector Borrowing numbers on Thursday. Friday should see Flash PMI numbers as well as the widely-followed GfK Consumer Confidence numbers.

RETAIL WITH NICK BUBB:

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