RTN update, Vianet, trading, inflation, closures, staycations & other:

A DAY IN THE LIFE:

Bit pushed for time. Another short week. On to the news:

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RESTAURANT GROUP TRADING UPDATE:

The Restaurant Group has this morning updated on trading for the first 4 months of the current year and our comments thereon are set out below:

The numbers: RTN reports that ’the combination of current trading and incremental cost savings achieved provides confidence that TRG is tracking ahead of management expectations on its medium-term margin accretion and deleveraging plans.’ It says Wagamama sales are up 2% LfL in the 13wks to 2 April. Pubs are up 5%, leisure is down 4% and concessions, where there is more travel activity, is up 37%. When the impact of the VAT rise is stripped out, rises are 9%, 10%, 2% and 44%. Including further weeks in Q2 to date, improves the numbers. Wagamama is up 9% in the 4wks to 30 April, pubs are up 8%, leisure is down 1% and concessions are up 20%.

Company comment: RTN says ‘Wagamama and Pubs have both continued to deliver strong trading, demonstrating the quality offerings and brand strength of both propositions.’ It adds that ‘TRG is accelerating the previously announced rationalisation plan…

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PUBS & RESTAURANTS:

Current Trading:

CGA reports that a ‘solid Easter’ has resulted in 7% drinks sales growth. It says ‘Easter holidays and decent weather helped managed On Premise venues achieve a 7% year-on-year increase in drinks sales over the three weeks to last Saturday (22 April)…’

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Upcoming Bank Holidays:

With one May Bank Holiday already in the bag, UKH says that ‘the combination of the King’s Coronation, Eurovision and three bank holidays means hospitality is set for a bumper month.’ It reports that ‘the King’s Coronation bank holiday weekend alone is set to deliver an individual boost of £350 million to the sector…’

Inflation:

The British Retail Consortium has reported that food prices for consumers continued to rise in April despite wholesale costs dropping. It reports that food inflation rose to 15.7% in April from 15% in March….

Closures:

CGA and Alix Partners have reported that some 4,593 hospitality venues closed in the last 12 months. It says there has been a 5.9% drop in independent sites but managed venue numbers were up 1.5%. The average drop is 4.3%. It says that the overall closure rate has slowed in 2023 but suggests that this positive change may be threatened as it says the cut in government’s energy support puts more venues at risk…

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Confidence:

The Institute of Directors reports that business confidence increased for the fifth month in a row in April. The net figure rose to minus 5 from minus 13 in March. The negative value means that pessimism still outweighs optimism across the sample base, but the direction of travel is positive.

Competitive Socialising:

KAM is to produce a report, Competitive Socialising: The Power of Play, on 17th May. It will point out that ‘40% of an entirely nationally representative base told us they have been to a dedicated competitive socialising venue’ and add that ‘there is a slight net increase in the frequency in which people are visiting these venues, continuing to buck the trends and macro pressure the hospitality sector in general is experiencing.’

Energy costs:

A number of trade bodies including the British Beer & Pub Association (BBPA), UKHospitality (UKH) and the British Institute of Innkeeping (BII) have come together to urge the government to intervene in what they call ‘unfair energy costs and contracts….’

Late night:

The Night Time Industries Association reports that ten nightclubs are closing every month in Britain and it says that nearly a third of clubs have closed since 2019. CEO Michael Kill says ‘with the impacts of Brexit, energy and cost inflation biting, we need the government to address the immediate issues…’

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Consumer debt.

The Citizens’ Advice Bureau reports that there could be a “debt time-bomb” developing. It says that 51% of people seeking help with debt issues have negative budgets, compared with 36% before the pandemic. He says ‘our numbers are starting to go in the wrong direction…’

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Other news:

Global wine sales. The International Organisation of Wine and Vine (OIV) reports that the value of global wine exports was at its highest-ever recorded last year despite price increases leading to a decrease in the volumes…

US experience. In the USA, data from Alignable shows that 49% of small restaurant businesses couldn’t pay the rent in April…

CGA in the USA points out that, in recent weeks, ‘check value is positive compared to last year (+7%), while ticket count is down -7%.’

UKH calls on the government to deregulate licensing and support the hospitality sector by making permanent a number of measures that were introduced temporarily during the pandemic. CEO Kate Nicholls says the measures ‘have enabled venues to generate additional income, increase footfall in local areas and support the growth of communities, so it should be a no-brainer to make them permanent. It would be a backwards step to return to previous licensing arrangements.’

Australia is proposing toughening up some anti-vaping legislation.

COMPANY NEWS:

Hostmore plc reported full year numbers after the market had closed on Friday evening saying that total revenue for the 52 weeks to 1 Jan 2023 was £195.7m, 23% higher than FY21 of £159.0m. The company says LFL sales revenue was +22%. Hostmore reports EBITDA (pre-IFRS16) down from £13m to £11.3m…

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Vianet has updated on trading saying that full year turnover is expected to be up c 7% to over £14.0m (FY 2022: £13.2m and FY 2021: £8.4m). It says operating profit is anticipated to be up c 30% at £3.1m (FY 2022: £2.4m and FY 2021: £0.7m loss) which is ahead of market expectations. The company says that ‘contract renewals and new contract wins have been encouraging, and recurring revenue from long term customers remains high at over 85% of turnover….’

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The Sunday Times reports that Blackpool-based Amber Taverns, which has 165 pubs, has performed well with net sales of about £96 million and underlying earnings of £20 million.

Jamie Oliver is reported set to launch a new chain of restaurants in Britain. The first will open in the autumn in Covent Garden.

Rémy Cointreau reports FY sales up 10.1% YoY to €1.55bn, with the increase driven by steep gains from price mix on ‘steady’ volumes….

Mowgli Street Food Group reported revenue up 214% to £26.9m in the year to 31 July 2022, driven by four new openings and strong underlying sales growth in the existing estate. Adjusted EBITDA was £3.3m vs £0.6m in 2021, with profit for the year of £521k, up from a loss of just under £2.8m the year prior. The Indian street food restaurant chain operated 15 sites as at the reported year end.

Flat Iron has applied for a licence for a unit on Deansgate in Manchester, marking the steak chain’s second restaurant outside London. The group currently operates 12 London restaurants.

The MA reports that Hampshire-based brewery Fallen Acorn has entered liquidation. The microbrewery said ‘Despite doing our best to weather the storm the industry has been facing since Covid and now from the inflationary impact on consumers and hospitality, trade has yet to return to normalised levels.’

HOLIDAYS & LEISURE TRAVEL:

The CEBR suggests that ‘the Coronation weekend promises to bring a much-needed boost to consumer-facing sectors that have been suffering from the ongoing cost-of-living crisis.’ it says pubs should do well and adds ‘the tourism sector is poised to reap the benefits too. The Coronation will attract people from far and wide to witness the unique occasion….’

Sykes Holiday Cottages has suggested that staycations could be add £28 billion to the economy this year, up from £15.5 billion last year. It says an estimated 40 million Britons are planning at least one UK break in 2023….

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The US is to drop Covid-19 vaccination requirements for entry from next week. The White House said ‘we are announcing that the administration will end the Covid-19 vaccine requirements for federal employees, federal contractors, and international air travellers at the end of the day on May 11, the same day that the Covid-19 public health emergency ends.’

Travel Weekly predicts that there are more cost-of-living pressures to come despite improvements in consumer confidence….

Tui has confirmed a final repayment of €750 million in Covid-19 related state aid, with CEO Sebastian Ebel commenting ‘We are very grateful to all those involved. Tui is strengthened and on course, now the focus is on profitable growth.’

The HVS European Hotel Transaction Report shows that hotel transactions across Europe failed to show the recovery expected during 2022 as confidence faltered. Transactions for the year fell 18% YoY to €13.3bn but the average price per room  rose 13% to €235,000 on the back of price rises in portfolio transactions…

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Accor reports Q1 revenues up 54% YoY to €1.1bn driven by a strong rebound in travel in Asia, with RevPAR up 19% vs 2019 Q1 and up 57% YoY…

OTHER LEISURE:

Bidders for Manchester United were told to submit their third and best offer for the club by 10pm Friday. The Glazers are expected to choose the preferred bidder sometime this week. There remain only two publicly declared offers, one from a Qatari-consortium led by Sheikh Jassim bin Hamad al-Thani and the other from Jim Ratcliffe’s petro-chemicals company Ineos.

Sky News reports that Fitness First is ‘working with advisers on a restructuring plan for the health clubs chain’ that could involve a renegotiation of some of the group’s lease liabilities.

Broadcaster Sky is reported to be considering hundreds of job cuts as it competes with streaming services.

FINANCE & MARKETS:

UK car production was up 6% on the same period last year in Q1. The SMMT reports that semiconductor shortages have eased. The SMMT says ‘a second consecutive month of growth for UK car production gives cause for optimism, though volumes are still well below pre-pandemic levels.’

Sterling up at $1.2492 and €1.1377. Oil price higher at $79.77. UK 10yr bond yield down 8bps at 3.72%. World markets mixed to better on Friday & Monday and London set to open up around 17pts as at 6.30am.

RETAIL WITH NICK BUBB:

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