Sentiment, reopening, takeaway food, tenant support, holidays etc.:

PREMIUM EMAIL – PLEASE DO NOT FORWARD:

A DAY IN THE LIFE:

It’s interesting how some people fill their time, isn’t it?

I got a text yesterday from a mobile number I didn’t recognise telling me that a parcel had been held up in the Royal Mail because of unpaid Duty totalling £2.70.

A few thoughts jumbled for attention.

Bloomin’ Brexit toward the fore, but then scepticism took over as surely the Royal Mail wouldn’t text from an 07 mobile number and who would include the mobile number of a package’s recipient, even assuming that they knew it, on the parcel’s wrapping?

Still, the link was to a www.royalmail.com page.

However, when clicked, it went to a www.royaimaii.com site which, to anyone unduly long-sighted, could look similar enough to the real thing to quell suspicions.

But, at that point, the game was up as it was clearly a scam.

I hadn’t been the first to spot the fake as the page was blocked but it did make me wonder why someone with the wherewithal to follow the news, know that Customs Duty was being regularly demanded on the doorstep and the nous to build a website (that would presumably then harvest your bank or credit card details), didn’t get a proper job or work for a charity or do something useful or, if none of the above, at least have the decency to throw themselves off a bridge.

Anyway, be warned. There are crooks amongst us and, with that in mind, let’s move on to the news:

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PUBS & RESTAURANTS:

CGA Fourth Business Leaders’ Hospitality Sentiment survey:

• CGA says that optimism is up a bit in Feb compared with Q4 last year when it previously took the industry’s temperature. Some 50% are confident in the industry and 54% are confident in their own businesses.

• There has been a big jump in those seeing a road through to a future in which they would be ‘viable’. The number saying ‘yes’ was up to 67% from only 20% in Q4.

• Langton Comment:

Requests for more help:

• Some one in ten operators (as measured by the confidence of their MD or chairman/person) say that they will need financial support from government to survive.

• 63% of respondents say they will not be in profit this year without further government help. A further suspension of business rates, maintaining the 5% rate of VAT and extending the furlough are the (perhaps unsurprising) top three requests with 80%, 73% and 53% of respondents respectively saying that this is what they would like to see. Only 17% would like to see a return of EOTHO.

• Rates’ suspension and the 5% VAT would be the measures most likely to ensure operators made it into profit this year (66%). Some 37% said that an extension of the furlough would be sufficient.

• Operators would seriously not like to see a delay in the legal retailing of alcohol (say for a month after pubs reopen). Budget leaks suggest this will not happen.

Closures, expansion & the outlook for jobs:

• 31% of operators will close sites. This is a) bad but b) less bad than it was in November last year and in June last year (expected closures 36% of operators). Most closures will be in city centres. London is singled out as being likely hit disproportionately by the lack of tourists, by the scarcity of events and by the propensity of office workers to work from home.

• On a brighter note, 58% of operators intend to open sites (up from 44% in Q4 last year), The proportion is a shade higher for large operators and much lower for smaller operators. This suggests that smaller operators may find survival (or at least expansion) more challenging. Whole company acquisitions are not out of the question.

• New entrants are believed most likely in delivery (58%) but also in pub restaurants and street food operators (at 51% each).

• Regarding employment, business leaders believe they will be back to 79% employment levels by July and to 90% by December. Getting hold of staff is less of a concern.

The consumer:

• CGA believes that 59% of customers ‘can’t wait’ to get back to the pub but adds that only 47% are confident of doing so.

• 98% of operators believe there is ‘pent up customer demand’ – but 71% expect customer confidence to be ‘fragile’.

• Demand returned strongly in July last year. There is some polarisation in expectations, with operators expecting high demand at both the top end and at the value end of the market.

• Customers are though likely to plan their visits more carefully. This should lead to forward bookings and it implies a bigger role for technology. A majority (72%) of business leaders see technology as vital or important.

CGA conclusion:

• CGA CEP Phil Tate says ‘this survey shows business leaders will be walking a tightrope in 2021. Nearly 12 months on from hospitality’s first compulsory closure, many thousands of venues and jobs have now been lost for good.’

• CGA continues ‘but it’s also encouraging to see that many businesses are optimistic about long-term prospects, and confident enough to be thinking about opening rather than closing sites.’

• The company concludes ‘it’s clear that a year of significant churn lies ahead, and as in all periods of crisis there will be winners as well as losers.”

The roadmap to reopening:

• A continued mix of optimism and disappointment sprinkled with pleas for Budget help next week and calls for more clarity.

• Dr Adam Marshall of the British Chambers of Commerce says ‘it is helpful that many businesses across England can now see a path to restart and recovery. Absolute clarity and honesty will be needed every step of the way over the weeks ahead, so that businesses have a fighting chance to rebuild. The stop-start dynamic of the past year, which has so damaged businesses and communities, must come to an end.’

• The BCC says ‘even with the Prime Minister’s new roadmap, the future of thousands of firms and millions of jobs still hangs by a thread.’

• The Food and Drink Federation says ‘it is disappointing but wholly expected that the Prime Minister’s roadmap shows no signs of taking account of any input from business. For a great many of the food and drink manufacturers supplying the hospitality and food service sectors, a return to ‘business as usual’ seems an awful long way off.’

• Journal Caterer.com says ‘despite their rigour and focus in implementing successful Covid-secure protocols, it is frustrating to see that restaurants and bars will be slow to fully reopen compared to other businesses.’ It says ‘studies have shown that with the right systems in place, hospitality businesses have extremely low transmission rates. The sector is raring to go, leading the way for trading responsibly and introducing procedures which ensure the safety of staff and customers.’

• Pavement licenses.

• Westminster Council tweets ‘our temporary al fresco scheme will return to Westminster from April 12 when outdoor hospitality reopens, running until the end of September.’ It says ‘businesses with a pavement licence will need to reapply as current licences will expire on April 30.’

• This at least has had a warm welcome. UKH’s Kate Nicholls tweets ‘hope that all councils will take a positive approach to outdoor seating and use from 12 April and adopt a light touch approach to licensing and grant maximum length to September.’

• Charlie Gilkes of Inception Group says ‘excellent to see this from @CityWestminster.’ He adds ‘thank you for being so quick to adapt.’

• Young & Co tweets that it is open for outside bookings. Last year, it’s worth remembering, April saw good weather. However, it is one of the year’s most varied months as far as the weather is concerned and a warm and welcoming outside environment can’t be guaranteed. Young’s says ‘wave goodbye to Zoom quizzes, turn off Netflix and join us as we raise a glass to being back together.’

Vaccine passports & Bank Holidays:

• UK Hospitality has said that vaccine passports might not be suitable for use in restaurants and bars. It says ‘vaccine passports could be useful in helping open up international travel more quickly, if used alongside other measures. We do not think that such a measure is going to be appropriate for day-to-day hospitality businesses, though. Businesses have already put measures in place to ensure that venues are safe. They will be opening under tight restrictions and approaching the job of reopening with a wealth of experience from last year.’

• UKH continues ‘in many cases, businesses have spent huge sums of money, changing layouts, overhauling staff training and ramping up cleaning regimes. This should be enough to ensure guests and staff are kept safe. We need to remember that hospitality is only linked to a tiny number of cases.’

• It adds ‘mandatory use of a vaccine passport will likely lead to headaches, place an extra burden on staff and cut revenue needlessly at a time when businesses cannot afford it.’

• There are growing calls for the Government to make 21 June, the day when it’s hoped all Coronavirus restrictions can be lifted, into a bank holiday. The hospitality industry has lost Valentine’s Day and will lose Mothers’ Day and Easter this year and a Bank Holiday, particularly in the better weather, could go some way to make up for this. A petition calling for the move has attracted tens of thousands of signatures.

Other Covid news:

• The Mail reports chancellor Rishi Sunak is considering lower alcohol duty for pubs than supermarkets in his Budget next week. It says ‘Tory MPs have urged the Government to treat pubs differently to large retailers to stop them being ‘undercut by cheap supermarket booze’’.

• US says that the pandemic will permanently change the way that some operators do business. This isn’t new news, as such, as it has appeared for some time that the Covid-19 situation has accelerated many trends already in place.

• FER says Taco Bell is ‘testing the waters on new concepts to better accommodate to-go service.’ Many other restaurants are doing the same thing. More drive throughs are being planned. FER says ‘Cheesecake Factory, too, thinks off-premise dining will remain important post-pandemic, in part due to a new clientele.’

• A survey across tenants of 19 pub companies undertaken by KAM Media has suggested that the majority are pleased with the support they have received from their pub companies during the Covid-19 crisis. The survey finds ‘a strong 8 out of 10 for their Covid-related support so far, with 53% of licensees rating the support they had received over the last 12 months as ‘outstanding.’’

• KAM MD Katy Moses says ‘given the year the industry has had, it is even more critical than ever that pub companies stay close to their licensees in order to evaluate their performance and ensure their offer for their tenants remains competitive. It is really uplifting to hear that the vast majority are more than satisfied with the support they have received and is testament to the British pub industry as a whole. We are delighted to be working with the country’s biggest pub companies and family brewers to provide robust and independent data on their performance to ensure they stay ahead of the game.’

• KAM stresses ‘whilst it is great news that licensees feel supported by their pub companies, there is absolutely no doubt that significant and further government support is urgently needed. This should be for all pubs at the same level that was given in the initial lockdown, no matter their size or rateable value. We need furlough to continue and a promise that pubs will not face a business rates bill this year.’

Company & other news:

• The Times reports that ‘Soho House, the chain of private members’ clubs, is poised to join the flotation boom as it plans to list in New York with a valuation of as much as $3 billion.’ The company first attempted a Wall Street float in 2018 at a price of around $2bn. The operation has 27 sites around the world.

• AB InBev has reported Fourth Quarter and Full Year 2020 Results saying ‘we finished the year with momentum in our key markets by leveraging our fundamental strengths as a company and capturing the benefits of investments we have been making for several years in our portfolio and rapidly growing platforms.’

• AB InBev says revenue in Q4 grew by 4.5% as it was ‘positively impacted by a continued volume recovery and revenue per hl growth of 2.7%.’ It says ‘in FY20, revenue declined by 3.7% with revenue per hl growth of 2.1%.’

• In volume terms, AB InBev says for Q4 ‘total volumes grew by 1.6%, with own beer volumes up by 1.8% and non-beer volumes up by 1.7%. In FY20, total volumes declined by 5.7%, with own beer volumes down by 5.8% and non-beer volumes down by 3.8%. The decline was primarily driven by impact of the COVID-19 pandemic.’ EBITDA in Q4 was 5 066 million USD which ‘represents a decrease of 2.4% with EBITDA margin contraction of 261 bps to 39.7%. In FY20, EBITDA declined by 12.9% to 17 321 million USD and EBITDA margin contracted by 382 bps to 36.9%.’

• Various Eateries has reported maiden full year numbers as a listed company saying that it believes it is ‘ideally positioned to capitalise on post-lockdown opportunities.’ The company says LfL growth was positive in its Coppa brand (up 0.8%) with ‘better than anticipated trading when the Group re-opened, from July to September.’

• Total group revenue was down 36% at £16.5m with an EBITDA loss before exceptional costs of £1.7m and a total loss after impairments of £14.4m. The company points out that these results do not include any trading from the newly acquired hotel entities.

• CEO Andy Bassadone says it ‘was a remarkable year for Various Eateries that puts us in an excellent position in 2021. The opportunities as we move out of the Covid-19 era are enormous and with strong liquidity, contemporary formats, a compelling growth strategy and a management team with a proven track record of delivery, we are confident in our ability to capitalise on them.’

• Bassadone says ‘while lockdowns restricted our ability to trade in the year, sales in the periods we were able to open were above our expectations and bode well for the future.’ He concludes ‘as soon as we are given the green light by Government, we plan to expand the business, to employ more people and to give customers high-quality experiences of hospitality, perfectly suited to a post lockdown world.’

• He adds ‘with large sites, extensive outdoor space and all-day offer, Coppa Club is perfectly suited to the increase in remote working and Tavolino is poised to take advantage of the availability of prime high street sites across the UK. There will inevitably be volatility as we emerge from the pandemic, but we are expecting a strong bounce back in the sector once restrictions are lifted and look forward to driving growth as soon as circumstances permit.’

• Foodservice Equipment Reports in the Peroni Libera 0.0% is to partner with Aston Martin as the latter returns to Formula One racing after an absence of 61yrs. Brand owner Asahi says ‘the partnership is in line with parent company, Asahi Europe & International’s responsible drinking ambition to have 20% share of their portfolio dedicated to non-alcoholic products by 2030.’ It says ‘this partnership will widen the awareness of Peroni Libera 0.0% to ensure it remains the number one choice for those seeking an aspirational non-alcoholic option as part of their balanced lifestyle.’

• Dutch cultured meat company Mosa Meat is reported to have raised a further $10m in funding. The company has raised a total of $85m in its current round after raising $75m last year. Mosa Meat says it will use the funds to expand its production facility in Maastricht.

HOTELS & LEISURE TRAVEL:

• Home Secretary Priti Patel has said that it is “too early to book” overseas holidays, even if operators are offering cash backs if holidays need to be cancelled. Ms Patel says ‘there are too many factors to consider before we can even speculate in a binary way, yes or no, if people should be travelling.’

• Nonetheless, there are more signs of strong bookings (albeit over short periods of time). Travel Weekly reports Midcounties Co-operative’s retail travel division as saying it had seen a ‘surge’ in bookings with traffic to its website up 130% on the same day the previous week. Travelzoo says that it has seen a spike in traffic with bed bank Stuba also reporting increased demand.

• Certainly it was another strong day for travel stocks on the market. Early news of Heathrow’s dreadful 2020 could not stop investors from looking to the future. Jet2 shares were up 6%, Hostelworld was up 8%, Saga and Carnival were both 22% higher and TUI’s shares finished the day up 12%.

• Just what degree of risk are holiday-bookers taking?

• The taskforce that has been created will report by 12 April with the earliest flight-inclusive holidays possible by 17 May. This would allow half-term holidays – but the latter date is the earliest possible and it might slip. Most operators are offering cash backs.

• Government docs say ‘the government will continue to protect against the risk posed by imported variants.’ It is understandably building in wiggle room if the dates slip. PM Johnson says that the taskforce will report to him and he will decide whether or not to go ahead with reopening based on ‘the global and domestic epidemiological picture, the prevalence and location of ‘variants of concern’, the progress of vaccine rollouts here and abroad, and what more the government has learnt about the efficacy of vaccines.’

• Travel Weekly reports that ‘Greece could reopen its borders to British tourists who can prove they have been vaccinated against Covid-19 as early as May’ citing The Times. According to the paper, Greece is exploring what certification might be required, alongside the necessary logistics.

• Staycations should be popular this year. Clearly they and overseas holidays are in competition with each other and, much as many holidaymakers would like to go abroad, if they do so, they will be spending money overseas that could have been used to help UK hospitality businesses.

• Heathrow yesterday reported that passenger numbers fell by around three-quarters last year. It did more business in January and February than it did in the other ten months of 2020 combined.

• Three-ship cruise line Azamara, which was recently sold by RCL to Sycamore Partners, has extended its suspension of sailings to 30 June. The operator says ‘in order to ensure the most effective initiatives are in place for a healthy return to service, Azamara has taken the decision to extend the suspension of global operations for all sailings departing on or before June 30, 2021.’

• Accor yesterday reported a €1.99 billion net loss for 2020, compared to a net profit of €464 million in the prior year. The company says ‘we saw signs of significant recovery in all regions in the third quarter, with a strong summer season in Europe, after the low point seen in the second quarter.’ It adds, however, that ‘the new restrictions implemented by European governments in response to the resurgence of the epidemic in the last quarter halted the summer recovery.’

• Accor says its hotels in the UK were affected by longer lockdowns than those in the rest of Europe as the resurgence of the virus was “more virulent”.

• Norwegian Cruise Line has told Travel Weekly that it is seeing strong bookings for Q4 onwards and trends including longer durations, extended family group bookings and customers upgrading to higher grades of accommodation.

OTHER LEISURE:

• Gear4music has updated on trading saying ‘we are pleased to report that Group trading performance in the 2021 calendar year to date continues to be strong. Both our UK and European Operations have performed well post Brexit, helping to drive revenue growth and support margins that have exceeded our previous expectations.’

• The company says it ‘now expects EBITDA for the 12 months ending 31 March 2021 will be not less than £18.2m, up from the guidance provided on 14 January 2021 of not less than £16.5m.’ The Group will provide a more detailed announcement regarding FY21 trading no later than 23 April 2021.

• Reddit has taken its Series E fund raise up to $367m, saying that the investment comes from ‘new and existing investors’.

FINANCE & MARKETS:

• Former Chancellor Philip Hammond has said the government must risk unpopularity and tell “some difficult home truths” about the state of the economy. At some point, it will have to balance the books.

• Sterling a little weaker at $1.4157 and €1.1626. Oil higher at $67.28. UK 10yr gilt yield unchanged at 0.73%. World markets better yesterday and London set to open up by around 18pts.

RETAIL WITH NICK BUBB:

Today’s News: The ABF (Primark) pre-close update (for the 24 weeks to Feb 27th) flags that only 22% of the chain’s space is currently trading, because of the lockdowns, but that should rise to 83% on 26 April (when the Scottish stores should re-open). Primark’s sales for the half year are estimated to be some £2.2bn, compared to £3.7bn in the first half of the last financial year, with £1.1bn of the drop caused by store closures and the adjusted operating profit for Primark in the first half is expected to be marginally above break-even (compared to an adjusted operating profit of £441m a year ago). The kitchen joinery trade group Howden still has its “stores” open, but, after a 4.5% drop in LFL sales in 2020, it has announced with today’s finals that adjusted LFL sales for the first 2 months of 2021 are only up by 6.5% and that “we have seen some greater caution from end consumers on
allowing trades people into their homes under the current lockdown”.

Online Lobby Watch: We didn’t have time yesterday to highlight the news that five of the UK’s most prominent Online retailers (ASOS, Boohoo, Ocado, AO.com and THG) have formed a new lobby group, the UK Digital Business Association (UKDBA) to fight their corner on an Online sales tax and to avoid being tarred with the same brush as the US tech giants like Amazon. The key driver is one Iain McDonald, the former City analyst who is now a serial non-exec and investor in Online retailers.  

Lidl Watch: This morning sees the opening of no less than three Lidl discount grocery stores in sunny south-west London. As well as the much-awaited 12,000 sq ft new Lidl in Richmond (which is actually in St Margaret’s, just over Richmond Bridge), there is a 9,000 sq ft replacement store in Tooting and a 6,000 sq ft store in Putney.