Langton Capital – 2020-09-11 – PREMIUM – Various Eateries, tracker sales, EOTHO, SAGA & other:
Various Eateries, tracker sales, EOTHO, SAGA & other:
PREMIUM EMAIL – PLEASE DO NOT FORWARD:
A DAY IN THE LIFE:
This is a short email being sent early but hopefully nonetheless riveting for that. On to the news:
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COFFER PEACH TRACKER: August sales register bounce: 11 Sept 2020:
• The Coffer Peach Tracker for August reports that ‘food-led pub and restaurant groups get August sales back on track.’
• It says ‘restaurants see biggest boost from Eat Out To Help Out’
• Regionally, London is still the least buoyant territory
• And ‘delivery’s share of sales still up on pre-lockdown’
Food v Drink:
• The Tracker says ‘Britain’s managed pub, restaurant and bar groups saw collective like-for-like sales bounce back up to 2019 levels in August thanks to the Government’s Eat Out To Help Out campaign.’
• It says the whole of the sector was 12.2% below last August’s levels. However ‘like-for-like sales in those businesses trading came out flat, so matching the sales volumes seen this time last year.’
• The cut in VAT and the EOTHO scheme have been major positives
• Unsurprisingly, restaurants ‘enjoyed the biggest boost last month, with group-owned sites that were open seeing collective like-for-like sales up 13.5% on August last year.
• A number of units, however, remain closed leading the Tracker to point out ‘because only 65% of chain-owned restaurants that were trading back in February were open again, total sales across that part of the market were still down 10.9% on last year.’
• Managed pub groups, which between them had 95% of their sites trading, had a more mixed experience, with like-for-like sales down 3.6% on last August and total sales down 9.4%.
• Bar groups performed least well with like-for-like sales down 27.6% and total sales down 37.0%.
London vs the regions:
• The Tracker confirms ‘regionally, London still struggled over August despite the assistance of the Eat Out To Help Out campaign with many office workers, commuters, tourists and international business travellers still staying away.’
• It says ‘like-for-like sales across pubs, bars and restaurants were down 13.4%, with total sales down 28.1%.’
• In contrast, outside the M25 the market saw like-for-like sales up 3.2% and total sales down just 7.9% on last August.
• CGA’s Clive Chessell reports ‘restaurants have had a good month, and although more were open – 65% against only 36% of group-owned sites in July – it is unclear how many of those still shuttered will eventually trade again.’
• He says ‘while in July pubs tended to have the best of the early weeks of reopening, food was undoubtedly the winner last month.’
• And adds ‘we will have to see if that starts to balance out again in September and if the momentum of Eat Out can be maintained with the Government’s new legal restrictions in force.’
• The Tracker reports ‘delivery accounted for 8.8% of sales among the casual dining groups in the Tracker cohort in August, down from 13.1% in July, but still up on the pre-lockdown percentage of 5.9% in February.
• EOTHO could have brought food share in house.
• RSM says ‘these results demonstrate what a huge success the Eat Out To Help Out scheme has been in spurring households to visit pubs and restaurants in August, many for the first time since lockdown began.’
• It says ‘operators will be desperate for this sales momentum to continue into the autumn but with further government-backed support looking unlikely, it seems inevitable that more job losses are just around the corner.’
• Trevor Watson of Davis Coffer Lyons makes the point that ‘the August figures are very much a one off and cannot be used to indicate any trends. The boost to food-led establishments due to Eat Out to Help Out is short term; the longer-term trend is the re-distribution in trade towards residential districts and away from commercial city centres and London in particular.’
• He says ‘the autumn sees the end of furlough and potentially the end of the moratorium on lease forfeiture. These twin threats are the biggest possible challenge to the industry, so although the doors are open to many pubs and restaurants, the market is more unstable than it has ever been.’
• Yes, winter is coming.
PUB & RESTAURANT NEWS:
• See also Tracker above.
• Fourth and Wireless Social have commented on the positive impact of Eat Out to Help Out on footfall and scheduled hours
• The companies say their data reveals a steady increase in the number of scheduled hours across the industry over recent months, with August generating a significant spike.
• Fourth says ‘the month of August was very encouraging across the board for the hospitality industry.’ It says ‘while this is incredibly positive for the industry, and a vast number of workers are returning from furlough, we are heading into the traditionally challenging autumn period.’
• Wireless Social says ‘the fact that August saw such a significant rise in footfall across the industry is very encouraging indeed. People wanted to take advantage of the brilliant Eat Out to Help Out scheme and get back out with their friends and family in their favourite places.’
• It says ‘however, the next few weeks and months are going to be very challenging, particularly in cities like London where large swathes of the workforce will continue to work from home, likely meaning that many restaurants, pubs and cafes will continue to trade at far lower levels for longer than other parts of the country.’
• It says this ‘is why we’re backing UK Hospitality’s latest initiative, calling on the Prime Minister and Mayor of London to support hospitality businesses in the Capital, giving them the opportunity to stay afloat and get back to what they do best.’
• Kam Media says ‘the hospitality industry NPS has bounced right back, exceeding pre-lockdown levels, following a significant dip for many segments during EOTHO. It says ‘dirty tables are the driver for an increasing number of customer complaints – this should be an easy fix but it seems more and more customers are noticing this week by week.’
Other Covid-19 issues:
• New West End says West End footfall was down 2% week-on-week on Wednesday, 9 September. Compared to the same day last year, footfall was down 57%
• Nicola Sturgeon has said that face coverings will be made mandatory in hospitality settings when moving around and not eating or drinking.
• A report in the US has found a lack of trust in returning to workplaces: Edelman says only around half of surveyed workers thought their workplaces were safe.
• The latest data from the We Hear You campaign, an initiative driven by Yumpingo, CGA and UK Hospitality to help the industry navigate the ‘new normal’ by using guest feedback, reveals that 80% of guests felt reassured by their dining experience to visit the same venue again.
• Various Eateries has announced its intention to list its shares on AIM. Admission is expected to take place end of September/early October 2020. The Company intends to raise up to £25 million by way of a placing of its Ordinary Shares on Admission.
• Various Eateries says it has an ‘exceptional leadership team – members of the VE Board have created some of the UK’s largest and most well-known hospitality groups. Between them, they have opened more than 400 new sites and have generated attractive returns for investors since the mid-1990s.’
• Hugh Osmond, Andy Bassadone and CEO Yishay Malkov have an impressive pedigree. The two core brands are Coppa Club & Tavolino. It has ten sites in operation, with five sites in London and five sites outside, providing a platform to scale organically at pace
• VE says there is an ‘unprecedented growth opportunity – the Directors believe site availability, acquisition opportunities, reduced competition, availability of talent and changes in consumer behaviour provide opportunities to accelerate the Group’s growth.’
• Hugh Osmond says ‘I believe that Covid-19 is the biggest event to hit the UK economy outside of war-time. Whilst I deplore the terrible effect it has had on our industry, we are confident that there will be major opportunities for a well funded group with strong management to build a fantastic business in the aftermath of Covid.’
• He says ‘the funds raised will be principally used to take advantage of the opportunities and accelerate growth. Our senior team has an established track record of acquiring, converting and opening sites and, with, what we perceive to be, the availability of premium sites at attractive rents, I believe the prospects for Coppa Club and Tavolino are exciting.’
• Osmond adds ‘there are also a number of well-known brands out there that are struggling to navigate the pandemic and various other industry pressures. Should the right opportunities present themselves, we would consider supplementing our organic growth through acquisition, offering distressed brands a more sustainable future as part of the Group.’
• Brewdog is launching a £7.5m crowdfunding round. It has attacked Boris Johnson over his lack of action on climate change
• Caffe Nero is the latest operator to appoint advisors to seek rent cuts from landlords. The company is working with KPMG
• Yesterday we suggested that UKH had combined with union, Unite, to set up a website, HospitalityUnite. This isn’t the case and the use of the word is coincidental.
HOLIDAYS & LEISURE TRAVEL:
• SAGA has raised £74.8 million via a share placing
• Commenting on the London hotel market, STR says occupancy in August was down 64%, rate was down 43% and REVPAR was down 80%. The boom in staycations has to be taken in perspective.
• Looking on the bright side, STR says ‘each of the three key performance metrics were up from July levels, while the occupancy and RevPAR levels were London’s highest since March. Regional markets in the U.K. continue to outperform capital cities.’
• Jet2holidays has extended the suspension of its package holidays to Greek islands Zante and Crete.
• Mainland Portugal has been added to the quarantine list for England
• IATA says UK air transport needs an “urgent rescue plan” in the face of an “imminent unemployment catastrophe”.
• IAG has finalised a €2.75 billion fund raising backed by largest shareholder Qatar Airways. The company says the proceeds will allow it to withstand a more “prolonged downturn” in air travel
• SAGA has shut down Destinology after plans to sell it fell through.
• The US Travel Association says that the travel industry in the US has lost $360bn in revenue due to Covid-19 to date.
• TUI is offering £1000 off holidays costing £1,000 or more to be taken in September.
FINANCE & ECONOMICS:
• Sterling lower at $1.2807 and €1.0809. Oil down at $40.01. UK 10yr gilt yield down 1bp at 0.23%. World markets mixed.
START THE DAY WITH A SONG:
The song has been furloughed. See you on the other side.
RETAIL WITH NICK BUBB:
• Yesterdat’s Press (1): The invaluable Guardian press briefing email highlights that the front-page headlines are focused on the news that the hapless Government is introducing a new rule banning gatherings of more than six people because of renewed pandemic fears…“There goes Christmas”, the Daily Mail laments today, as it calls the new rule “draconian” and the Telegraph is also gloomy (“Christmas to bring little cheer”) and the Times takes a similar line with “PM fears threat to Christmas”, whilst the Guardian itself highlights the “PM’s £100bn gamble to avoid second national lockdown”. The FT goes with “Johnson is accused of Brexit nadir with threat to rewrite EU treaty”.
• Yesterday’s Press (2): The terms of Retailing stories, there is plenty of coverage of the news that 125,000 Retail jobs have been lost this year and Pizza Hut is closing more stores, together with the news that the controversial new CVA plan from the embattled New Look seems likely to fail, with the Business editorial in the Telegraph flagging that hard-pressed Retail landlords have to face the prospect that the business will now go bust. The Telegraph also highlights that Tesco is preparing to trial Grocery delivery by drone. The Times notes that Liberum, one of the few independent brokers not involved in the IPO, has come out with a bullish view of The Hut, calling it a “gem of a business” that could be worth £7bn to £7.5bn. And the Tempus investment column in the Times looks in detail at Burberry and says the shares are a Buy.
• JD Sports Paris Watch: Having flagged yesterday that JD Sports has just opened a flagship store on the Rue de Rivoli in the centre of Paris, we read yesterday that the Store Design expert John Ryan has featured the store on his Newstores blog: “In terms of high profile sports stores, 1200 sq m may not sound much, but the JD Sports stores on Paris’ Rue de Rivoli is notable if only because it has been a long time coming…and in spite of this it has garnered little coverage. Opened last month, the store is on a wraparound corner site and trades from three floors and has a raft of VR and digital initiatives”.