Langton Capital – 2020-11-30 – PREMIUM – Table ordering, Thurs reopening, Commons’ vote, ESC, Disney etc.:
Table ordering, Thurs reopening, Commons’ vote, ESC, Disney etc.:PREMIUM EMAIL – PLEASE DO NOT FORWARD: A DAY IN THE LIFE: With The Mighty Hull City leading League One by a comfortable margin we’ve decided to lobby for an end to the season at this point because if such a course of action is good enough for the (current) President of the United States, then it should be good enough for us. Anyway, somebody mentioned the TV Test Card over the weekend and, after having mentioned it to some of our adult children, I concluded that you needed to be over a certain age to even know what I was talking about. And that led to a consideration of other services, habits and products that have gone the way of the dodo like, for example, bookmarks. I mean I’ve never knowingly purchased a bookmark but, what fridge magnets are today, bookmarks were arguably yesterday – and now they’ve gone. And what about ‘double-clicking’? Our daughter doesn’t know what that is and, come to think of it, why did we ever bother with two clicks in the first place? So, with that in mind, we’d better move on. Friday is a long way off. Here’s the news. ADVERTISE WITH US: Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details. DIFFERENT ATTITUDES TO TABLE-ORDERING APPS: With meals and drinks having to be ordered from table (when outlets are open), apps have come into their own. 30 Nov 20: The scenario: • Helped by the fact that customers weren’t allowed to visit the bar (and they won’t be from 3 Dec either), table ordering apps have come into their own. • Some operators such as JDW had them already and others were quick to access the tech either from scratch or by adopting a white label product. • These save time and money. They cut queueing but they also reduce interaction between staff and customers. • Both M&B commented on them last week. It is likely that Loungers will do so this week as the company reports H1 numbers on Wednesday. The case in favour of apps: • M&B said that click & collect and table ordering had grown rapidly and it said that these developments (and also video-conferencing etc) would be used to cut costs going forward • M&B said they cut queues at the bar • Queues, in M&B’s view are a bad thing because they slow service and could put off some people from coming to the bar at all • The company believes spend per head may have been pushed up because service has been easier (at least from the customers’ point of view) • A quick survey (OK, just two or three family members) suggests people don’t like queueing as it can become a stressful free-for-all and, even if it doesn’t, it means that the person at the bar loses out on ten minute’s conversation back at the table • Quote. We don’t go to pubs to talk to staff and elbow other punters out of the way to get served. The case for personal service: • Fuller’s said that it has an Order & Pay facility. This is web-based rather than an app. • The company says it ‘was never there to replace people’. • it says customers seem to ‘prefer to be served by a person’. • Simon Emeny said that click & collect, which is admittedly a rather different thing, ‘is not a natural fit for Fuller’s’. • Fuller’s believes that personal service is part of the all-round pub experience. Overall: • It is possible that both M&B and Fuller’s are right in their interpretation of the merits and demerits of table-ordering, especially if they are evidencing different types of pubs • However, it would seem reasonable to assume that table-ordering apps are bigger now than they were pre-Covid and, even if some of the usage falls away, they will remain a feature of the market going forward WILL THERE BE A LOCKDOWN 3.0? Dominic Raab has said that if MPs do not back the government tomorrow, there could be a third lockdown. 30 Nov 20: • This is where the action is. The appearance of three vaccines closes the angles down a little. • In the meantime, Lockdown 3.0 is being used as a stick to beat or shepherd MPs with. • We commented more fully on 17 and 18 November – but Cabinet Ministers are now openly talking about the potential need for a 3rd lockdown if strict measures are not backed now THE END OF LOCKDOWN 2.0: It’s easy to forget now, but an extension of the lockdown had previously been a possibility. • Lockdowns were extended in other parts of the UK. • The arguments (libertarian vs medical) were finely balanced. • We suggested that the lockdown would end – and the odds were skewed more in favour of this outcome by the appearance of a number of vaccines • And it is indeed ending though, as Tier Two and Tier Three have been made more restrictive and more regions have been put into the higher tiers, some have suggested that it is a continued lockdown by stealth • Our opinion was that PM Johnson would have done (and he did do) almost anything to stop people from shouting at him. • TV footage of the police arresting UK citizens for simply standing on the street (albeit in larger groups than allowed under the law) probably tilted the odds in favour of a definite reopening • So here we are. The country, well, Cornwall and the Isles of Wight and Scilly, will open on Thursday. • But nothing is without consequence and the odds on a third lockdown before Easter have narrowed slightly SEE ALSO COMMENT ON GOVERNMENT ‘EVIDENCE’ BELOW. PUBS & RESTAURANTS: Trade to partially reopen from Thursday morning: • Everyone has got an opinion and below we summarise some of them. In the meantime, the trade, which has to deal with realities, will be planning to open in Tier One, partially in Tier Two but not in Tier Three (other than for delivery) from Thursday morning. • Hopes of another U-turn: • The government certainly has form when it comes to changing its mind. This doesn’t sit well for industry, which has to plan ahead. Nonetheless, the Sunday Times reports ‘Johnson in retreat as Tory revolt over tiers rocks no10.’ • There is talk of a capitulation by the PM to backbenchers. The Sunday Times says ‘Boris Johnson capitulated to Tory MPs last night, announcing that he would reform his new coronavirus crackdown before Christmas after threats by backbenchers to vote down the government’s plans.’ • It says ‘in a sign of disarray in Downing Street, the prime minister wrote to MPs, signalling that millions of people who will be hit with the toughest restrictions this week will see them eased on December 19.’ • Johnson apparently ‘announced that the new rules would be scrapped altogether in February unless MPs want them to continue — putting an end to claims that tough restrictions will continue until Easter.’ The Sun had earlier, and probably with good reason, reported that restrictions would be in force until ‘Easter Funday’. • The Sunday Times says Johnson is now promising that ‘millions of people whose towns and cities will be placed in tier 3 this week will be downgraded to tier 2. That will allow people to go to pubs.’ • This would come as a relief to many in Tier Three but it remains to be seen whether the climb-down is sufficient to head off a backbench revolt when the measures are voted on tomorrow. • The betting is that the measures as previously announced will be enacted. But this is hardly the stable environment with a degree of certainty that business would like to see if it is to trade to the best of its admittedly diminished ability. • Cabinet division. • Johnson is saying that entire counties will no longer need to be treated in the same way. Michael Gove had said only hours earlier, writing ironically in The Times, ironically, that tiers would have to cover entire counties because ‘casting the net wide is more effective’. Evidence lacking? • The Daily Mail reports that ‘critics claim scientific experts ignored their own advice that infection risk is low in well-aired restaurants.’ • It reports ‘an advisory paper on the importance of ventilation was published in September’ looking into ‘aerosol transmission’ of the virus. It says that that SAGE concluded there was ‘currently no evidence’ for infecting someone more than two metres away from the spreader in well ventilated spaces. • Pubs and restaurants are typically much better ventilated that private houses. Building regs going back to 2005 mandate that public places – which include pubs and restaurants – must have ventilation systems that provide an air flow rate of at least 10 litres per second. This implies better ventilation than that at which SAGE found zero evidence of transmission (with social distancing). • The R rate is now below one says PHE. Comment on evidence published by government: • The government published limited comments on the evidence behind its decision to target hospitality on Friday. Continued in Premium Email • It says: ‘there are four types of evidence currently available to understand where transmission is occurring; each has limitations, but they are consistent in supporting the view that hospitality venues are a significant risk for transmission.’ • It says ‘transmission risk is a combination of environmental and behavioural factors: higher risk contacts are those that are close, prolonged, indoors, face-to-face, in poorly ventilated and/or crowded spaces, or involve “loud” activities. These are all prevalent in the hospitality sector.’ • It says ‘the disinhibitory effects of alcohol are likely to exacerbate difficulties with social distancing.’ • The government says: ‘the general picture in the UK (and overseas) is that it has only been possible to get R consistently below 1 in places where there have been substantial restrictions on hospitality.’ • It says evidence from ‘Japan, China, South Korea, and Indonesia noted that their largest superspreading events originated from pubs, clubs, restaurants, gyms and wedding venues.’ • It mentions bars in Hong Kong and nightclubs in Seoul. It does not source data from European countries, which have had much more significant outbreaks than those in the Far East. • It says ‘case-control and other association studies…look for a statistical correlation between activities/locations and infection and have found significant associations between hospitality and infection. A report from the US CDC found that those infected with SARS-CoV-2 without known close contact with a person with confirmed COVID-19, case-patients were 2.8x more likely to report dining at a restaurant…or 3.9x more likely to report going to a bar/coffee shop…than were control participants.’ The impact: • The latest Market Recovery Monitor from CGA & Alix Partners will show that 36,648 premises (all licensed premises, that is pubs, clubs & restaurants)—39% of England’s total—are located in Tier 3 areas, where hospitality venues must stay closed except for takeaways and deliveries. • CGA says ‘another 55%, or 55,502 sites, are in Tier 2 areas, where alcoholic drinks can’t be sold unless with substantial meals. CGA’s research suggests that at least a third of these sites will not be viable under these and other Tier 2 restrictions.’ • These numbers broadly mirror those supplied by JDW for its own estate on Friday. • CGA says ‘just 2% of England’s licensed premises—a total of 2,227 sites—are located in Tier 1 areas, where restrictions are loosest. Here, too, a significant number of businesses could decide to remain closed.’ • Businesses will be virtually shut in Tier Three, will be lossmaking in Tier Two and will struggle to make a profit in Tier Three. Trade response: • Hospitality bosses have suggested that the latest government restrictions could leave the sector in “smouldering ruins”. Stonegate chairman Ian Payne tells the Sunday Times ‘we feel like scapegoats without the evidence to support what the government is doing.’ • Payne said that pleas to keep the sector open had fallen on ‘deaf ears’. UKH says that 89% of the sector will be unviable under the rules which are due to come in from Thursday. Marston’s CEO Ralph Findlay says ‘it’s another broken promise. I don’t know where that leaves us in terms of trust with the government. It’s not great.’ • Shops will be allowed to stay open for longer in the run-up to Christmas to help the high street, says minister Robert Jenrick. Only drinking with a meal: • The Tier Two rule that alcoholic drink can only be served with a meal has led many observers to question just how long a pea can be left on a plate such that the meal is not yet ‘finished’. • The answer may depend on how busy the venue is. We would suggest that many venues will be happy to serve another round of drinks every 40 minutes or so and that a pea would suffice to prove that the meal was still ongoing. • Given the pushback being seen on the streets and allegations, hopefully unfounded, that the UK is becoming a totalitarian state, it is very unlikely that the police will want to get involved. • Downing Street says ‘we’ve been clear that, in Tier 2, you need to have a substantial meal if ordering any alcohol and it remains the case that the guidance says that once the meal is finished, it is at that point’ that you need to get out. Given the number of U-turns to date, observers could be forgiven for thinking that it is not clear at all that the above would still be the rule even as the words were uttered. Other news: • Night time economy advisor to Manchester Sacha Lord tweets that ‘it speaks volumes, that tomorrow Andy Burnham, Keir Starmer, Angela Rayner, have put an hour and a half in the diary to listen to me and other hospitality operators. That’s leadership. That’s what this Government have shown none of.’ • Colliers reports retailer and hospitality businesses have been warned that the business rates holiday will end as planned after income from the tax was predicted to grow by £12.8 billion next year. John Webber, head of business rates at Colliers International, property advisers, said it was “desperately disappointing” that Rishi Sunak, the chancellor, had not given companies “clarity over whether they will be facing massive business rates rises again in April next year” in this week’s spending review. • KAM Media comments on low and no alcohol products saying it is a category in growth ‘not only in sales, but in importance.’ It says ‘we conducted some research in January asking how many people had tried Low/No as a category, and it stood at 22%. We asked the same question in July; 38% had.’ • Big Hospitality reports that Individual Restaurants, which owns the Piccolino, Restaurant Bar & Grill, Opera Grill and Bank brands, has been acquired by the directors of Iceland supermarket, in a transaction worth more than £40m. • Heineken has appointed James Thompson as its new chief commercial officer. • Chapel Down reports that it has produced over a million bottles of wine this calendar year. It says ‘we have seen an explosive growth in our e-commerce and direct sales and real excitement from our retail partners.’ • China imposes import taxes on Australian wine of up to 212%, starting on Saturday. • Arcadia has had a bad few days. See Nick Bubb. Sir Philip Green’s retail empire Arcadia, which includes Topshop, Burton and Dorothy Perkins, could face collapse within hours reports the BBC. Billionaire Mike Ashley is reported to have written offering support saying ‘our offer would allow you to retain employment for many thousands of your staff, reopen hundreds of stores when the current lockdown ends, and protect the financial positions of thousands of members in your pension schemes.’ Elsewhere, Moss Bros is also considering a CVA. HOTELS & LEISURE TRAVEL: • Vaccine stamps in passports may be used to prove that British travellers have been inoculated against Covid-19 reports The Telegraph. • Given the tiers into which they fall, four Center Parcs resorts are to reopen on December 4 • Chrystal Ski has cancelled its holidays to France for the rest of the year. • Travel Weekly reports that ‘Portugal is focused on rebuilding trust and meeting tourists’ new needs in the hope of a rebound in UK visitors next year, according to the president of the country’s tourist board.’ • Newcastle has joined Gatwick and Edinburgh in announcing Covid-19 testing for passengers. The tests will cost £99 per head. That’s quite a bump for a family of five or six. • Travelodge says it has received landlord support for its CVA. • IATA fears that vaccines will not come soon enough to prevent several airline collapses. IATA chief economist Brian Pearce says ‘airline debt has gone up more than 50% to $280 billion. Airlines have to be able to service that debt and have money left over to refurbish fleets and pay debt down. It is going to take years.’ OTHER LEISURE: • Disney has said that 32,000 theme park staff will have lost their jobs with the company by the middle of next year. • Escape Hunt has updated on its reopening plans saying that ‘other than those in areas designated ‘tier 3’ under the UK Government’s Coronavirus tiered classification system, [its units] will re-open on 2 December 2020. The sites that will re-open are Basingstoke, Liverpool, Norwich, Reading and Oxford.’ • ESC also says that its newest site in Cheltenham will also open. CEO Richard Harpham says ‘we are pleased that much of our UK estate will be open from 2 December 2020 and are very excited to be opening our newest site at the Brewery Quarter in Cheltenham. The performances of both our recent openings in Norwich and Basingstoke give us cause for optimism for Cheltenham. Whilst the restrictions imposed by the tiered system mean life is not able to return to normal, the strong performance during the schools’ half-term week in October, during which a number of sites were subject to the tier 2 or tier 3 restrictions in place at the time, provides a positive indication for prospects over the Christmas and New Year period. This will be further supported by the progress we have made with our digital and remote play propositions and we approach the future with cautious optimism.’ FINANCE & MARKETS: • Sterling lower at $1.3345 and €1.1142. Oil down at $46.90. UK 10yr gilt yield up 1bp at 0.29%. World markets better on Friday but Far East lower in Monday trade & London set to open down around 40pts. RETAIL WITH NICK BUBB: • Saturday’s Press and News (1): The front page headlines of most of the Saturday papers were dominated by the row about the draconian new Tier 2/3 decisions: the Times took the Government line, giving time and space to a column by the oleaginous Michael Gove that argued “”Support us on curbs or Covid will swamp NHS””, whilst the Daily Mail splashed with “Locked in until Easter”, but the Telegraph tried to avoid the subject by running with “Last-minute dash to stop Christmas rail chaos”. The Guardian, however, decided to focus on the undeclared wealth of the Chancellor’s wife (“Sunak faces questions over family’s fortune”), whilst the FT went with a very different story: “Green’s Arcadia retail empire teeters on the brink of collapse”.
• Saturday’s Press and News (2): In terms of Retailing stories, there was, of course, plenty of coverage of the news that the aforementioned/embattled Arcadia is on the brink of going into administration at last (after failing to secure £30m in emergency funding), as first reported on Friday by Sky News. The Daily Mail and the Times both had double-page spreads on their News pages about the downfall of Philip Green: the Daily Mail called him “Sir Shipwrecked” and noted that he is ditching many of his “billionaire baubles” (including London properties and his bodyguards), whilst the Times had articles headlined “Rise and humiliating fall of man who lost his Midas touch” and “Nimble rivals left Topshop trailing”. The Guardian also had a detailed article about Arcadia: “A rags to riches retail story tarnished by bad deals and payouts”, whilst the main Business story in the Telegraph was,
• Saturday’s Press and News (3): In other news, the Arcadia news knocked Black Friday out of the spotlight, but the Guardian was not deterred and its main Business story was that “Black Friday sales down sharply despite boom in Online spending”, given early indications from Barclaycard and John Lewis: eg Online sales at John Lewis were “only” up 35% on Friday, even though nearly all the stores are closed. The Guardian also had some vox pop from the shoppers flocking to the shops in Cardiff and it also flagged that the giant Hermes delivery depot at Hemel Hempstead was expecting parcel volumes to be only 50% up on Black Friday last year. In terms of troubled fashion retailers, the Times also highlighted that Moss Bros has joined the list of those failing businesses planning a CVA to cut their store rents. The market report in the Times noted that M&S was hit on Friday by a downgrade • Sunday’s Press and News (1): The headlines on the front pages of the Sunday papers were all about the Government’s handling of the move from lockdown into tiers on Dec 2nd: the Observer went with “Angry Tory MPs turn on Gove after “overwhelmed NHS” claims”, highlighting that the Nightingale hospitals lie empty, but the Mail on Sunday gave space to a column by the hapless PM, with more mixed messaging: “PM: Let’s not trip on last barbed wire”. The Sunday Telegraph ran with “Virus tiers could end in 9 weeks, MPs told”, whilst the Sunday Times flagged that “Johnson in retreat as Tory revolt over tiers rocks No 10”.
• Sunday’s Press and News (2): In terms of Retail stories, the big news was the Sunday Times splash that the impending collapse of Arcadia has cast serious doubt over the planned JD Sports rescue of Debenhams (which has spooked JD shareholders), with JD boss Peter Cowgill now said to be concerned about a third lockdown in January and the distraction to his core business…In passing, the Sunday Times also flagged that Peter Cowgill rejects the suggestion of Mike Ashley that he was encouraged to buy Debenhams by Philip Green to stymie Sports Direct/Frasers, with this priceless quote from an insider: “If Peter was trying to buy a banana plantation in in Grenada, Mike would be up in one of the trees somewhere. He’s always sniffing around” (!). The Sunday Times also had a detailed background article about the collapse of Arcadia (“Is this the moment that Covid killed off the High Street?”), • Sunday’s Press and News (3): In terms of all the Economics and comment columns in the Sunday papers, after Wednesday’s so-called Spending Review, we would, as usual, highlight the column by the Sunday Times Economics correspondent David Smith (“Sunak’s talk of emergency can only knock confidence”), in which he noted that “there is good reason to expect a strong recovery in the next two years” (assuming a Brexit deal is reached). We would also flag the columns by the veteran City commentator Jeremy Warner in the Sunday Telegraph (“Britain has been left horribly exposed to changes in the financial weather”) and by the veteran Economics commentator William Keegan in the Observer (“If the deficit scares the Chancellor, who does he back Brexit?”). • Today’s News: After all the speculation in the weekend press about Frasers’ interest in the bankrupt Arcadia and JD Sports’ waning interest in the bankrupt Debenhams, you might have expected the companies to have issued some sort of official update to the City this morning, but neither company has said anything (yet). There has, however, been the news that Pets at Home has announced the acquisition of The Vet Connection, “the UK’s largest independent veterinary telehealth provider”, for £15m in cash. • News Flow This Week: The Online discount jamboree continues today with the ghastly CYBER MONDAY, but English consumers will soon be hopefully flooding back into the High Street, after the re-opening of non-essential shops. Before that, as we move into December, tomorrow brings the Topps Tiles finals, whilst the latest quarterly FTSE index review is announced on Wednesday evening. The B&M EGM is on Thursday, along with the Signet Q3 and the Kroger Q3 results in the US, whilst the ABF/Primark AGM update is on Friday. TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 24 Nov 20 Compass Group FY numbers • 26 Nov 20 Fuller’s H1 numbers • 26 Nov 20 Britvic FY numbers • 26 Nov 20 New River H1 numbers • 2 Dec 20 Loungers H1 results • 2 Dec 20 Stock Spirits FY numbers • 4 Dec 20 Shepherd Neame AGM • 8 Dec 20 Vianet H1 numbers • 10 Dec 20 Marston’s FY results • 10 Dec 20 On the Beach FY results • Est 15 Dec 20 Fulham Shore H1 numbers • 17 Dec 20 Revolution FY numbers • 17 Dec 20 JD Wetherspoon AGM • 22 Dec 20 Revolution AGM • 12 Jan 21 Nichols FY trading update • 20 Jan 21 JD Wetherspoon H1 update LANGTON CAPITAL: Made in Hull. Like all the best things. Langton Capital is a financial advisory company providing insightful views on the UK and global leisure industry and the wider consumer sector in general. Subscription to the daily email is free. Unsubscribing is painless. We provide daily off the shelf and bespoke research. We have helped with transactions, fund-raisings, disposals and other corporate issues. We have a good ear, we are impartial, independent and not half bad at what we do. If you think that we could help you or your business, drop us a line. |
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