BOWL, FUL, RNK, GAW, delivery, GfK confidence, bank rate & other:

A DAY IN THE LIFE:

Do you ever get that ‘running out of energy’ feeling by the time it gets to Friday?

Or Tuesday, or even Monday at some times of year because, when it’s minus five outside and as black as pitch until 8am or so, it can be hard to persuade yourself to push on even when, as Mrs Thatcher liked to say, TINFA – there is no alternative.

Anyway, thanks to those who commented on the garden birds story yesterday.

Apparently, the Redwings are likely from Iceland (certainly from somewhere with few buildings as they flew into our study windows two or three times each yesterday) and the excess blackbirds haven’t read the end-of-free-movement memo as they’re from Eastern Europe.

Right, enough of that. Have a great weekend and let’s move on to the news:

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FULHAM SHORE – H1 NUMBERS:

The Fulham Shore has today reported H1 numbers and our comments are set out below:

Headline numbers:

• The Fulham Shore has reported H1 numbers to 25 September saying the revenues were up by 26% at £49.9m with headline EBITDA of £10.5m (down from £10.6m) and a profit after tax of £0.3m (against £2.4m in FY21).

• The company says the figures are ‘reflecting the absence of the business rates holiday, lower VAT rate, and COVID-19 grants that were in place during the prior year comparable period.’

Cash & debt:

• Fulham Shore reports that net cash at the end of the period was £2.8m (2021: £5.1m) and says that, post the H1 end, it has extended its £17m loan facility to November 2025).

• The group reports that, as of yesterday, it had net cash of £0.7m and undrawn debt facilities of £16.9m.

New openings & expansion:

• FUL reports that, during the period, it opened 11 new Franco Manca pizzerias (one of which was a relocation) and 2 new The Real Greek restaurants. It also closed one due to its lease ending

• The group had 93 restaurants operated as at 25 September 2022 (2021: 75)

• Post the period end, the group has opened 2 further Franco Manca units (to 71 pizzeria) and 2 further The Real Greek sites (to 26 restaurants)

• FUL announces that it has ‘agreed terms of a franchise territory agreement for Franco Manca in Spain which we believe is a potential major market.’

• The company also reminds investors of its ‘strategic expansion into retail in November with launch of debut range of five premium Franco Manca Chef’s Selection cook-at-home pizzas available to purchase in over 500 supermarkets across the UK, with encouraging levels of sales so far.’

Current trading and outlook:

• The company says that ‘trading during the first two months of the second half of the financial year was well ahead of the comparable periods in 2019 and 2021, at 46% and 12% respectively.’

• It adds ‘furthermore, the Franco Manca loyalty programme continues to grow in user numbers with 350,000 users and over 50,000 loyalty pizzas enjoyed by our loyal customers.’

• Chairman David Page says ‘notwithstanding this momentum, the Board remains mindful that we continue to operate against an unstable political and economic backdrop, which in turn has impacted consumer confidence and  driven up our costs as well as facing significant challenges from the ongoing transportation disruption.’

• He concludes ‘reflecting on this, our aims over the coming 12 months are to conserve cash for our shareholders, to proceed cautiously, and take advantage of ever-decreasing rents.’

Company conclusion:

• Chairman David Page says ‘the Group traded in line with management expectations during the period despite challenging trading circumstances.’

• He says ‘this creditable performance was underpinned by continued strong revenue growth at both Franco Manca and The Real Greek reflecting both businesses’ high-quality food and excellent value-for-money propositions.’

• Mr Page adds ‘during the six month period the Group made solid strategic progress, opening a total of 11 net new restaurants in the UK and since the period end have agreed the terms of a new franchise agreement for Franco Manca in Spain which will see the opening of two restaurants in the country early next year.’

• He says ‘our UK restaurant expansion is now complemented by the launch of our very first range of cook-at-home Franco Manca sourdough pizzas into 500 UK supermarkets. The customer reception to the range has been encouraging since its launch in November, and we look forward to seeing this develop further over the coming months and years.’

Langton comment:

• Given the bad news circulating regarding consumer spending as a whole, it is worth remembering that hospitality has been around for millennia and it has survived fire, flood, pestilence, war & famine.

• It has survived through recessions and depressions and there is no reason to think that it will not survive whatever might befall it as a result of the cost of living crisis.

• All of which means there will be winners as well as losers. Fulham Shore looks as though it should be amongst the former group.

• It has an authentic product, enthusiastic & well-motivated staff and well-located sites. It has grown its delivery business materially and has a healthy balance sheet and a well-defined pipeline of new openings.

• Openings have been financed by internal cash flow, debt has been extinguished, unused facilities are there if more sites become available and the group is considering paying a dividend.

• The group is performing in line with expectations in a difficult market. It is doubtless outperforming its competitors.

• The opportunity for new sites has rarely been this good as competition for sites is reduced, rents are coming down and inducements from landlords are there to be had.

• The company has the flexibility, of course, to slow its opening programme if trading continues to trend down, which it appears to be doing.

• Build costs and operating costs are on the rise but the company is raising prices to account for this. Notably, it is maintaining cash rather than percentage margins and its customers are likely to appreciate this.

• The group looks like a winner. Supply is falling. New entrants will hesitate to enter the market and, meanwhile, FUL continues to walk the walk and to deliver on its potential.

PUBS & RESTAURANTS:

The squeeze on the consumer:

The Citizens Advice Bureau reports that the monthly number of people that it helps with energy-related problems and issues rose to a record high in November as the cost of living crisis continues. The charity said it had helped almost 215,000 people with energy issues, up 50% YoY…

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Spending in other areas could diminish resources when it comes to spending money in the UK’s pubs, clubs & restaurants…

Writing in The Guardian, ex-PM Gordon Brown says that ‘the DWP has now become the country’s biggest debt collector, seizing money that should never have had to be paid back, from people who cannot afford to pay anyway…’

Surveys:

GfK has updated on consumer confidence in the UK saying there has been a ‘modest improvement to minus 42.’ It says there is ‘no winter cheer as Index remains at historic lows…’

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Delivery:

CGA reports on managed restaurant groups’ delivery and takeaway sales, saying they ‘continue to plateau after hitting record highs during COVID lockdowns.’ It says ‘combined sales in November 2022 were 1% behind November 2021—the 12th month of year-on-year decline in a row, but a small improvement on October’s figures…’

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Transport issues:

Network Rail said only about 20% of normal services were expected to run during the Tuesday and Wednesday strikes. Springboard reports that footfall  at shops close to offices in central London was nearly 37% lower on Tuesday than the same day in 2019…

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Springboard comments on footfall and says ‘the evidence is clear that UK retail destinations have been hugely impacted by the rail strikes this week in terms of footfall, which inevitably will have meant a significant reduction in the amount spent in both retail and hospitality businesses…’

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Other news:

The BBPA reports that pubs across the country are providing vital warm spaces for local communities during the cold snap, but that energy suppliers are adding hidden charges to contracts which could lead to the closure of these warm spaces…

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The Drinks Trust and Vagabond Wines have launched their first ‘Hospitality Covered’ wellness day for people in the industry. With the aim of offering a day focused on the mental, physical and financial well-being of industry colleagues, Hospitality Covered will offer expert talks and seminars on a range of topics.

The Evening Standard reports that ’an outdoor dining scheme temporarily put in place in Pimlico for restaurants, cafes and bars during the Covid pandemic could be made permanent.’ It says ‘the alfresco dining scheme on Warwick Way and Churton Street was implemented in July 2020.’

ASDA chairman Lord Stuart Rose has told Sky News that it is “shocking” that in modern Britain one in five households haven’t got enough money to live on each month.

COMPANY NEWS:

City Pub Company chairman Clive Watson claims that pubs face a ‘bleak’ future as costs climb and discretionary spend reduces…

Admiral Taverns has called its 2021 acquisition of the Hawthorn pub estate a ‘transformational event’ as the group reaches £152.8m in revenue…

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HOLIDAYS & LEISURE TRAVEL:

Tui reports that holiday prices are up 23% for the season from October 2022 to March 2023 compared with the same period in 2018-19, but that consumers remain undeterred, with sales 5% ahead of pre-pandemic. Overall, across Europe, winter prices are up by 7% compared to winter 2021-22.

Ground handlers who are part of the Unite union are set to strike over the new year after a revised pay offer was rejected. Furthermore, a walk out planned for Friday will go ahead for 72 hours. The post-Christmas stoppage will also coincide with the planned walkout by Border Force staff.

Meanwhile, strikes planned by ground handlers at Heathrow from tomorrow have been suspended following talks between the Unite union and Menzies.

Parkdean Resorts has introduced electric vehicle charging points, electric vans and the installation of solar panels in part of a new energy-saving drive.

The 69-room Rotherham Travelodge budget-luxe hotel is scheduled to open in 2024. It will be the group’s 36th hotel in Yorkshire and will create around 25 new jobs within the community.

Specialist Caribbean tour operator Fun Travel has failed and ceased trading as an Atol trader. The company traded under the Bonaire Fun Travel and Caribbean Fun Travel names.

OTHER LEISURE:

Games Workshop has announced ‘that it has reached an agreement in principle with Amazon Content Services…for Amazon to develop Games Workshop’s intellectual property into film and television productions and for Games Workshop to grant Amazon associated merchandising rights.’ GAW says it ‘makes no change to its forecast for the period ended May 2023.’

The Rank Group Plc has updated on trading performance for the five months to 30 November 2022, saying that NGR for the period to 30 November 2022 was up 1% compared to the same period in the prior year.

Rank says ‘whilst there has been some improvement in Grosvenor’s trading over the last few weeks, trading in Q2 has been weaker than expected, with weekly average NGR of £5.8m being only marginally ahead of the levels seen in Q1.’ It adds ‘we had expected Grosvenor venues to have continued to improve throughout Q2 and then into the second half of the year, but this improvement has not yet materialised, driven by lower customer spend per visit…’

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Hollywood Bowl has reported FY numbers to end-September saying that revenues rose by 49.2% to £193.7m with profit after tax of £37.5m against £22.3m in the prior year. Total dividends per share for the year will be 14.53p against 11.93p last year…

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Netflix shares fell by 8% yesterday on reports that its advertising-funded services had got off to a slow start.

Former US President Donald Trump is producing digital trading cards depicting him in various poses including those of a superhero, an astronaut and a Nascar driver.

The Twitter accounts belonging to some critics of Elon Musk are reported to have had their accounts suspended.

FINANCE & MARKETS:

As expected, the Bank of England raised UK rates by half a percentage point yesterday to 3.5%. The rate is now at its highest level in 14yrs. The Bank has said it will announce further rate rises next year…

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The ECB has raised rates from 1.5% to 2.0%. It is to begin quantitative tightening by reducing its balance sheet by 15 billion euros per month on average until the end of the second quarter of 2023.

Sterling weaker at $1.2207 and €1.1486. Oil lower at $81.07. UK 10yr gilt yield down 7bps at 3.25%. World markets weaker yesterday but London set to open up around 25pts.

RETAIL WITH NICK BUBB:

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