Brewery openings, additional capacity, Monarch, strikes & other:

A DAY IN THE LIFE:

So who first said ‘the pleasure is all in the giving’ and were they being sarcastic or did they really mean that they get more of a buzz out of giving something away than they do in consuming it themselves?

At face value of course they did but, even if that is so, I would suggest that these were either words from the mouth of a rather atypical person or they were spoken once in a blue moon by an individual who spent the remainder of his/her time with their snout very firmly in the trough and that they had to tick the ‘not a selfish pig’ box every year or two.

Or they may have been words uttered by a recipient rather than a giver because you try making the tea and coffee for everyone in the office every day for a year or so and see how you feel when one person tells you it’s too cold, another too hot, another than it’s got bits in, that it came a bit late this morning, could you hurry up etc. etc. and see if you can resist tipping it on their heads. On to the news:

PUB, RESTAURANT & DRINKS PRODUCERS:

• FT reports a new brewery opens every 3dys in UK. Some 134 opened last year to take the total to 1,692. Accountants UHY Hacker Young reports ‘craft beer is leading the way in the surging popularity of artisan products and has pushed aside other brands in high-street bars’. It says ‘this increasing popularity has transformed many microbreweries into highly profitable businesses for entrepreneurs looking for a niche position in the food and drinks market.’

• IPOs seem to be back in fashion.

• Majestic Wine is hosting a site visit for Institutional Investors and Analysts today at its newly revamped Majestic Wine Store in Welwyn Garden City. It says ‘the visit will include a presentation on Majestic Retail’s transformation plan, a tour of the store and wine tasting with senior management. No new trading information will be disclosed.’

• Chinese takeaway delivery chain Hotcha reported to have secured £7.5m investment to fund national expansion plans. Telegraph has co vowing to become the Domino’s pizza of the Chinese takeaway market.

• Hotcha secures 5yr loan from Beachbrook Capital. Will open 10 locations in London & S/East over next 18mths. Founder James Liang says ‘from day one, our aim was to develop a national chain.’ The co generated £1m in EBITDA in the year to end-March 2016. Mr Liang comments ‘what fascinates me is that before us, there was no national player in the Chinese takeaway market, even though it is twice the size of the pizza delivery market.’

• Laine Brew Co has launched its brewery and has unveiled its inaugural portfolio of craft beer. Brew Co director Jack Hibberd reports ‘we’ve been working hard on the recipes for months at Laine’s micro-breweries and are now ready to upscale production to our new facility located in the heart of the Sussex Downs.’

• G1 Group has reported FY numbers to end-March showing turnover up marginally at £70.5m & EBITDA of £16.4m. The group says ‘it has been a challenging year for the Scottish economy, and the Group as a prominent feature in the hospitality and leisure sector, has had to weather the storm. Despite that, G1 Group (Holdings) is able to report positive results and continued expansion.’ The group says ‘despite the uncertainties prevailing, not least the implications of the European Referendum, G1 is continuing to invest selectively in Scotland.’

• Restaurants that fail to reduce sugar content of portion sizes could be named and shamed as part of a drive to tackle obesity in the UK, according to The Times. Jeremy Hunt has said that eating out ‘is no longer a treat’ and as such chains including Gourmet Burger Kitchen, Starbucks, and McDonalds have been told in a private meeting to set an example to the rest of the industry. Hunt reportedly said: ‘We can’t ignore the changing habits of consumers. This means we expect the whole of the out-of-home sector – coffee shops, pubs and family restaurants, quick service restaurants, takeaways, cafes, contract caterers and mass catering suppliers – to step up and deliver on sugar reduction.’

• The ALMR has criticised the additional bureaucracy that Jeremy Hunt’s proposed national restaurant pudding database would bring for pubs, bars and restaurants. ALMR Chief Executive Kate Nicholls said: ‘Pubs, bars and restaurants have already made, and continue to make, great effort to provide customers with information to make informed choices on their eating habits out of the home. Many outlets provide information on calorie content and food provenance to ensure that customers understand exactly what they are eating, to help encourage healthy eating habits.’

• Jamie’s Italian was the biggest contributor to the Jamie Oliver Group in 2015 as its 9% increase in turnover to £116.1m contributed a group total of £158m. The restaurant business reported a 7.4% increase in adjusted EBITDA to £13.2m and opened eight new restaurants around the world.

• Bedlam Brewery is launching a £330,000 crowdfunding campaign on Crowdcube to go along with the £170,000 recently raised from shareholders. The brewer is run by former founder and managing director of Dark Star Brewery, Paul Reed, who has joined up with Dominic Worrall and Fabio Israel.

• Enterprise Inns has reached 100 managed pubs with the opening of the Caerphilly Cwtch in Caerphilly, Wales. The site will operate within Enterprise’s Craft Union Pub Company as part the pub co’s stated strategy of actively growing its managed estate.

• The BBPA is reminding licensees to check their new valuations and has provided an online guide to help with the process. This is the first time the valuations have been amended since 1st April 2010. BBPA Chief Executive Brigid Simmonds commented: ‘Whilst we won’t know the final shape of bills until the Government decides on the multiplier, which is effectively the tax rate, it is still vital for licensees to be aware of this major change. There will certainly be premises that will see an increase in their rateable value, particularly where the business has thrived over the past eight years, and we will be looking at ways to mitigate any sharp rise in bills for these premises.’

• JD Wetherspoon is putting another five pubs on the market, making for a total of 11 freehold and 15 free-of-tie properties up for sale. The units being marketed by CBRE and Savills are Central Bar in Cardiff, Robert Ransome in Ipswich, Jug & Jester in Leamington Spa, Colombia Press in Watford, and the Robert Hamilton in Airdrie, writes Propel.

LEISURE TRAVEL & HOTELS:

• Monarch has been granted a 12dy extension to its Atol licence following talks with the CAA. The airline had been seeking further funding and now says ‘the company has also received significant further investment from shareholders and is close to announcing the largest investment in its 48-year history’. CEO Andrew Swaffield says ‘I am delighted that we have been able to come to an agreement with the CAA on the extension of Monarch’s Atol licence and am excited about the additional capital coming into the group which will help us fund our future growth. I am immensely proud of the professionalism of the Monarch team.’

• Monarch thought likely to announce fleet order of up to 45 new planes after securing bank and shareholder funding

• The RMT union is to ballot its members on the London Underground re strike action. Some Virgin train workers in the North East are today on strike. Despite the move to Oyster cards and contactless payment, the RMT says ‘if London Underground really cares about passengers it would reverse the ticket office closure programme.’

• Transport secretary Chris Grayling has said that a decision over an additional runway near London will be made ‘shortly’.

• Flight comparison websites such as Skyscanner could be made to disclose the commission they receive from airlines by the CMA.

• Rocco Forte Hotels is expecting only modest growth this year as terrorism fears and the uncertainty generated by the US election hold back bookings. In the year to the end of April, the Hotel Amigo in Brussels suffered a 40% slide in revenues amid fallout from the attacks, although total revenue rose by 7% on a like-for-like basis and pre-tax profit rose by £6m to £8m.

• VisitEngland figures the number of day trips rose to its highest level since 2012 in August, with 151 million trips generating record spend of £5.5bn. The top reasons for day trips were to ‘go out for a meal’ followed by ‘taking part in leisure activities’ including walking, cycling and golf, and ‘visiting friends and family.’ The north-east saw the highest year-on-year percentage rise in days out, up 34% to 52.8 million in the first eight months of the year, followed by the West Midlands, while London had the largest spend on day trips with £7.3bn

• IHG and NOVUM Hotel Group have signed a deal to develop 20 hotels across Europe.

OTHER LEISURE:

• Sunday Times reports Ritz Club casino has fallen to losses of £12.1m as the group has written off some gamblers’ unpaid debts. The Sunday Times reports an ‘insider’ as saying that the losses, some £14m, stemmed from ‘no more than half a dozen’ individuals.

FINANCE & MARKETS:

• Tit for tat? You fine BP, Deutsche Bank, go after RBS, hit Glaxo, we go after Apple, Google etc.

• PM Theresa May says she will trigger Article 50 by end of next March at the latest. The UK should then leave the EU by March 2019. She says ‘it is up to the government not to question, quibble or backslide on what we have been instructed to do, but to get on with the job.’

• Trade minister Liam Fox has said UK should agree deal with World Trade Organisation in order to minimise disruption

• This is new ground but current EU rules suggest UK won’t be permitted to negotiate until it has completed exit process in 2019

• Responding to calls for Gov. to pay compensation if barriers are put up to future trade, minister Liam Fox ducks, insists UK is ‘safe’. Nissan CEO Carlos Ghosn said last week that his co may scrap new investment in Britain unless the country pledged to pay such compensation.

• City sources will suggest that up to 70k City jobs could be lost in the absence of passporting

• UK services sector grew 0.4% in July per ONS. Early days but taken as good news.

• UK GDP grew by 0.7% in Q2. ONS reports ‘this fresh data tends to support the view that there has been no sign of an immediate shock to the economy, although the full picture will continue to emerge.’

• Further rate cuts in the immediate future taken to be unlikely.

• Firms are said to expect a ‘surge in economic activity’. Not clear quite why.

• Nationwide has reported that house prices rose by 5.3% in the year to September, down from 5.6% in the year to August. The m-o-m move was +0.3%.

• Nationwide has called upon housebuilders to accelerate their various build programmes. It says, nonetheless, that demand for homes has recently fallen. Nationwide reports ‘the relative stability in the rate of house price growth suggests that the softening in housing demand evident in recent months has been broadly matched on the supply side of the market.’ It says ‘survey data indicates that, while new buyer enquiries have remained fairly subdued, the number of homes on the market has remained close to all-time lows, in part due to low rates of construction activity.’

• World markets: UK mixed on Friday, Europe higher. US also up and Far East markets mostly better in Monday trade

• Oil price off the top but firmly better over the last few days. Brent Crude trading at around $50 per barrel

YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:

• Merlin comments on UK-bound tourists saying it is ‘about friends & family, these are not free-spending visitors’.

• Merlin comments on tourists still somewhat at odds with pub, restaurant experience. London is still pretty busy

• FT reports first signs of price hikes on High St in response to post-Brexit vote weaker Sterling.

• A report by the IFS has found that people in their 30s have around half the wealth that people of the same age did 10yrs ago

• A study by the Money Advice Service (MAS) has found that more than 16 million people in the UK have savings of less than £100

• Pepsi yesterday reported Q3 numbers saying revenues were down 1.9% on the quarter – but that underlying revenues were up

• Real estate company Colliers International has warned that upcoming business rate revaluations will be ‘largest change in a generation’

• Turkish president Erdogan has said that emergency rule could extend beyond 12mths

• IHG now sends out 800,000,000 emails per annum in 15 different languages. The group has 11 call centres in 7 countries.

• Brexiteer Liam Fox has said that the UK’s trade with the EU post exit will be “at least as free” as it is now. Nick Clegg says that he is “delusional”

• Other Tweets: Bank of England credit data shows consumer borrowings up 10.3% y-o-y in August. With CPI at 0.6%, that may not last

• GfK has consumer confidence bouncing back in September, rose by 8pts to minus 1. Says ‘consumers appear to have shrugged off Brexit fears’

• GfK says lower interest rates ‘encourage people to spend rather than save’. And that’s a good thing, is it?

• Lloyds business barometer improves, sees growing optimism. Levels still below longer term averages.

• Inflation. Dish cloths, tea towels, table cloths +17%. Small electricals +5-10%. Commodities priced in $$s, inflation out there somewhere?

• Turkey set to extend martial law. Not the sort of move likely to fill the country’s beaches. Western Med, Canaries likely to benefit

RETAIL NEWS WITH NICK BUBB:

• Grocer Watch: The widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s Grocer magazine saw what it calls “the most unpredictable and even period of competition in the history of the Grocer 33” continue, with Asda beaten yet again, this time by Morrisons. The Morrisons basket of £57.64 was 24p cheaper than Asda and Asda has now won only 5 times in the last 16 weeks, despite its pledge to be 10% cheaper than its rivals. The Sainsbury basket cost £61.38, just behind Tesco on £61.18 (before an instant cash discount of £4.20) and poor old Waitrose was way behind, as usual, with a basket costing £66.20. The separate Grocer “Mystery Shopper” weekly survey on Store Service and Availability was won by Sainsbury for the 2nd week in a row, as their 60,000 sq ft superstore in Carlisle topped the rankings, with a score of 81 out of 100.

• Saturday Press: There were a couple of interesting people moves on Friday and the main focus in the Saturday papers was on the news that Simon Roberts, the former UK boss of Boots, has been appointed by Sainsbury’s as their new Retail and Operations Director (replacing Roger Burnley), as noted by the Times and the Daily Mail. And there were snippets in the Telegraph and Daily Mail about the news that the footwear business Clarks has appointed the former Karen Millen boss Mike Shearwood as its new CEO. The other big focus was on the news that London retailers will bear the brunt of the latest Business Rates overhaul, although the bills for struggling Northern towns will be cut: the Guardian article noted research showing that Regent Street shops face an 87% rates rise and Trafford Centre shops will get an 8% rates reduction. The Times had a feature interview with Matthew Barnes,
the CEO of Aldi UK, following the recent results, in which he talked bullishly of their plans to expand into every town in the country, despite the grocery price war. The Times also noted that the former JJB Sports boss Dave Whelan has bought the Fitness First gym chain for his gym business DW Sports. And the FT had a big article about the impact of the fall in sterling on imported electrical goods, with Apple one of the first to put up its prices. Finally, the upgrade on Burberry by RBC on Friday was widely noted in the market reports.

• Sunday Press: Ahead of Wednesday’s Tesco interims, there were several upbeat previews and headlines in the Sunday papers about the recovery (eg “Tesco set to show darkest chapter is finally over” in the Sunday Telegraph and “Tesco in shape for price war” in the Sunday Times), with the Observer also highlighting role of farm brands like “Redmere”, although it was also widely noted that the £5bn pension deficit is a problem. The Observer had a rather gloomy article about John Lewis, on the back of the news that MD Andy Street is stepping down (“John Lewis chief’s abrupt departure for politics leaves store chain facing challenging times”), noting our view that the new MD is likely to have a “nitty-gritty focus on profits”. The news that another private equity group Bluegem has stepped in to back the struggling
fashion chain Jack Wills merited front-page fashion model photo treatment in the Sunday Telegraph Business section. The main Business story in the Mail on Sunday was that the disgraced former owner of BHS, Dominic Chappell, is in trouble for deliberately not paying tax in order to give himself dividends. The Sunday Express featured a story that Halfords should benefit from the boom in action cameras for bikes. Finally, ahead of their results next week, Dunelm and DFS got some editorial comment, with a detailed Questor column in the Sunday Telegraph arguing that shares in Dunelm are only a Hold, given the uncertain economic outlook, whilst the Inside the City column in the Sunday Times bemoaned the way in which DFS always claims to be cutting sofa prices and argued that the shares are a Sell.

• John Lewis MD Watch: We listed on Friday the leading internal candidates to succeed the John Lewis MD Andy Street, but the next MD of John Lewis will inherit a business on October 31st with great strengths but also some weaknesses. What is clear that high up on his or her agenda will be a review of the operating cost base and the productivity of all the selling space in the business. John Lewis has been able to outperform its peers and deliver decent overall LFL sales growth thanks to its superior Online sales growth, but translating this into improved profits has been problematical. The fact is that when Andy Street took over as MD back in 2007, John Lewis was making operating profits of just over £200m and achieving an operating margin of 9%.  This year, given the way things are going, John Lewis will do well to make much more than £200m in operating profits and the operating
margin will probably be under 5.5%. Of course, this year has been hit by extra distribution costs etc, but there is always something “exceptional” like that in a department store business…

• News Flow This Week: As we move into October (and Q4), the big event this week is the Tesco interims on Wednesday, but ahead of that Majestic Wine are taking analysts to see their revamped store in Welwyn Garden City this afternoon, Greggs have a trading update tomorrow morning and the new Waitrose management team is holding a drinks party for analysts at the Waitrose Cookery School in Kings Cross tomorrow evening. It is also a big week in the world of Furniture and Furnishings Retailing, with the SCS finals tomorrow, the Topps Tiles pre-close on Wednesday and then the Dunelm Q1 and DFS interims on Thursday.