Punch Pubs, ROO, XPF, Gordon Ramsay, competitive socialising & other:

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A DAY IN THE LIFE:

Congratulations to Hull City for not losing on Saturday.

Not so good was throwing away a one-goal lead at home, albeit to a team justifiably nine positions higher than us in the Championship but the fact that there are two sides to everything set me thinking.

I mean winners are single-minded, bold and driven, right?

And losers are obstinate, impetuous and arrogant but, when you analyse it, those characteristics are pretty much identical and beauty – or the lack of it – is not only in the eye of the beholder but it relies very much on hindsight.

Then again, don’t we all. On to the news:

PUBS & RESTAURANTS:

Trading:

CGA has updated on trading via its Daily Drinks Trackers for the weeks to 1st and 8th February saying that sales bounced as the impact of Storm Éowyn abated. CGA says that ‘pubs and bars ended the month in better shape as some consumers returned after paydays. Trading amongst drinks categories was exactly level year-on-year in the seven days to 1 February’. It adds that sales were down by 2% (c5% including the impact of inflation) in the week to 8 February…

• The first of the two weeks was clearly the better trading period. CGA says that sales ‘picked up at the weekend with growth of 2% on both Friday and Saturday (31 January and 1 February). This coincided with the start of the Six Nations rugby tournament and some big football matches.’

• CGA says that, in the week to 1 February, wine performed particularly well at plus 5% with soft drinks and beer, at +2% and +1%. also positive. Cider sales were down by 2% and spirits sales were 7% lower (c10% in real terms). In the second of the two weeks, wine again outperformed at +4%. Beer and soft drinks were again positive at plus 1% each but cider was down 2% and spirit sales were down a discouraging 14% on the same week last year.

• Rachel Weller, CGA by NIQ’s commercial lead, UK & Ireland, says ‘real-terms sales growth has been elusive in the opening weeks of 2025, with Dry January, bad weather and hesitant consumer confidence all conspiring against suppliers and operators.’ Determined to source a bit of good news, she says ‘we can be optimistic about a Valentine’s Day boost and trends in the wine category are particularly encouraging. For brands and venues that can understand consumers’ needs and adapt nimbly to trends, the long-term sales outlook remains good.’

Outgoing Greater Manchester late-night economy advisor Sacha Lord has written in The Express saying that ‘our local pubs were once the beating heart of our towns.’ He adds that ‘that way of life is under threat and it’s hard not to miss it….’

• He says that ‘the real issue for me lies in the challenges these establishments face: rising operational and energy costs, increased taxes and a lack of genuine support are all pushing landlords to raise prices, and so the spiral continues.’ Mr Lord says that ‘beyond the economic implications, the impact on employment, particularly in our younger generations, will be devastating.’

Competitive socialising:

The FT has cautioned that ‘the UK market for “competitive socialising” venues risks becoming oversupplied as they [the major operators] struggle to encourage repeat visits.’ This was always going to be the risk. Diving into a ball-pool may be fun, once, but it is – arguably – not something that even the most hardened fun-seeker will do every week…

• The FT points out that some operators ‘insisted that, despite several years’ rapid growth, they still had room to grow through branching out overseas, regularly varying the activities offered or targeting less saturated UK locations. Savills suggests that there are now around 600 outlets across the UK offering competitive socialising games stretching from golf to axe-throwing. Savills expects further growth, to more than 800 sites, by 2029.

• Tim Wilks, founder of bowling chain Lane7, says ‘the markets are evolving quickly [to the point] of oversupply in certain markets.’ He says ‘we are trying to figure out what’s a fad and what’s got longevity.’ He points to axe-throwing and asks, ‘is it something people need to do 10 times?’

• Richard Harpham, chief executive of XP Factory, which runs 26 Escape Hunt games room sites and 31 Boom Battle Bar entertainment venues in the UK, tells the FT that many small operators faced “constant cash challenges”. Mr Harpham says problems will likely worsen following planned increases in employers’ national insurance contributions and the national minimum wage from April.

Other news:

Scotch: Scotch whisky exports have fallen in value terms by 3.7% but risen in volume terms by 3.9% as overseas customers have presumably traded down.

Train strikes. The RMT says it ‘has suspended planned strike action today and Monday by Rail Gourmet members on the TransPennine Express contract, following significant progress on disciplinary issues.’

The MCA quotes M&B CEO Phil Urban as saying that PM Keir Starmer’s support for the Daily Mirror’s Save Britain’s Pubs campaign is “fairly worthless” without tangible action.

Day parts. The Times reports that the morning day-part ‘is the future.’ It says ‘the slow death of Britain’s night-time economy has been well documented’ and adds ‘people are just not going out as late as they once did’. WFH is boosting morning, presumably largely non-alcoholic, trade.

WFH. The Times goes on to report that only one in ten Gen Z employees want to work in the office full-time. It says that a half of them concede that they are less industrious than their parents.

In the US, some 95% of operators have told the National Restaurant Association that customers have become more value conscious.

COMPANY NEWS:

The Punch Pubs Group Ltd updated on trading for the 16-weeks to 1 December 2024 on Friday. The company, which comprises 1,267 pubs, 92% of which are owned on a freehold or long-leasehold basis, announced that total revenue (for the 16 weeks) was £97.3 million compared to £96.0 million in the prior year period….

• It says that ‘all three divisions (Leased and Tenanted, Management Partnership and Laine) delivered like-for-like Underlying EBITDA growth.’ The group reports that ‘underlying EBITDA for the pub estates (Management Partnership, Leased & Tenanted and Laine) before central costs increased by £2.1 million to £36.2 million’. Post central costs, EBITDA for the period was £26.5 million (prior year 16 weeks: £25.0 million) of which £27.1 million was classed as Underlying EBITDA (prior year 16 weeks: £25.6 million)….

• Punch goes on to say that for the rolling 52-week period, the company reports that ‘underlying EBITDA for the 52 weeks to 01 December 2024 of £92.6 million.’ It says this ‘compares positively to the £76.0 million of Adjusted Underlying EBITDA from the wider Punch Group in the year to August 2019, being the most recent financial year prior to the Covid pandemic.’

• Current trading: Re Current Trading and the Outlook, Punch reports that the moving annual total ‘EBITDA of £92.6 million to 01 December 2024 will be further boosted by +£4.8m incremental EBITDA from the recent acquisition of 36 pubs in H2-FY24 and 18 pubs in Q1-FY25.’ It will also benefit from circa £2.4 million of run-rate cost saving efficiencies. The group therefore reports that this leads to an ‘adjusted run-rate EBITDA of £99.8 million.’ Punch reports that ‘Quarter 2 trading [the company is an August year end] to date has been encouraging with profitability ahead of the prior year.’

• Acquisitions & sales. Punch reports that in the 16 week period the Group has spent £11.0 million on the acquisition of 18 pubs. It expended around £10.7 million (prior year 16 weeks: £7.7 million) on expansionary and maintenance capital. Re disposals, the company says that net proceeds from sales amounted to £4.3 million (prior year 16 weeks: £4.1 million), at £0.4 million above book value.

• Balance sheet – investment, debt etc. Punch reports that the value of its property assets increased by £13.7 million in the period to £929.5 million (11 August 2024: £915.8 million). Units are predominantly freehold, with 92% of the pub portfolio owned on a freehold or long leasehold (greater than 50 years remaining lease term) basis. The net book value is based on the most recent (five yearly) valuation that was undertaken in August last year.

City AM reports that Pret A Manger ‘has been hit with a winding up petition by a business water supplier over unpaid debts.’ Castle Water is looking for around £1,500.

Deliveroo is reported to have sacked over 100 riders in a crackdown on its employment of illegal immigrants…

• The Telegraph reports that the company told MPs some 105 workers who illegally shared their rider accounts with undocumented immigrants have been fired. The had been employed under Deliveroo’s system of substitutes, whereby employees can share their job.

• Deliveroo says it ‘has led the industry in taking action to secure our platform against illegal working. We were the first to roll out direct right to work checks, a registration process, daily identity verification and now additional device checks for riders, including substitutes.’ The company adds that ‘we take our responsibilities extremely seriously and continue to strengthen our controls to prevent misuse of our platform. We would encourage the Government to ensure all major platforms urgently adopt the same standards.’

XP Factory has today announced that it is proposing to conduct a balance sheet re-organisation by way of a reduction of capital. It reports that ‘this is a preliminary step to providing the distributable reserves required to have the ability and flexibility to return capital to shareholders in future. The reduction of capital will be subject to shareholder approval and a court approval process.’

Gordon Ramsay Restaurants is set to acquire the site of La Gavroche in Mayfair according to reports. Elsewhere, The Times reports that Mr Ramsay ‘has struck a deal to merge the UK and US operations of his restaurant group in a move that will bring in fresh investment from Lion Capital, the US private equity firm….’

• The Times reports that Lion Capital could add further funds after making an initial investment into Ramsay’s US business of $100 million in 2019. Gordon Ramsay Restaurants now comprises some 32 restaurants in the United States and 22 in other countries. The group employs 1,100 people in the UK and 750 people in the US. It booked global sales of $500.8 million last year.

• Mr Ramsay sold a 50 per cent stake in his North American restaurant business to funds tied to Lion Capital in 2019. He said in a statement ‘this is an exciting new chapter for our business, building on over five years of collaboration with Lion Capital.’ The celebrity chef adds ‘together, and with the support of a brilliant team, we are poised to grow our international reach, create new partnerships and bring exceptional dining experiences to more people around the world.’

Peter Wells, CEO of Charles Wells & Co, has reported that strong sales have put the company in an encouraging position…

• Mr Wells says ‘our financial year runs from October to September and we’re pretty pleased with the results.’ He says ‘we always want more but our sales for the year were up £3.5m, which is 6% and reached £65.8m. And operating profit was up to £3.5m and that’s a 14% increase on the year before.’

• Mr Wells adds ‘it’s a challenging environment that’s not been helped by the weather. Interestingly, we record the daily sunshine, rainfall and temperature because I got so bored about complaining about the weather that I thought I need to get more than just anecdotal complaints in place so we’ve just done a bit of research analysis that shows if a storm comes through at the weekend, it will cost us, as a group, £50,000.’

Starbucks CEO Brian Niccol has told Bloomberg TV that the company intends to open 500 new stores in the Middle East and North Africa before 2030.

HOLIDAYS & LEISURE TRAVEL:

UK Inbound is backing Gatwick’s plans to bring its second runway into regular use. UK Inbound says ‘inbound tourism to the UK was worth £32 billion to our economy in 2024’. The body says ‘London Gatwick plays a vital role in this industry’ and it adds ‘growth of the airport will result in better ability for potential customers to visit and with expanded capacity comes the potential for new routes, including from high-value markets such as North America, Asia and the Middle East.’

FINANCE & MARKETS:

The ONS reports labour market stats tomorrow and CPI numbers on Wednesday. Analysts are expecting CPI to have risen from 2.5% in December to around 2.8% in the year to January.

Sterling mixed at $1.2586 and €1.2003. Oil lower at $74.92. UK 10 year gilt yield up 2 basis points at 4.51%. Markets weaker on Friday and into Monday but London set to open up around 6 points as at 6.30am.

RETAIL WITH NICK BUBB:

Nick is taking a short break.