Langton Capital – 2021-04-14 – Reopening, Just Eat, RBG, costs, Scotland, Deliveroo etc.:
Reopening, Just Eat, RBG, costs, Scotland, Deliveroo etc.:
A DAY IN THE LIFE:
So, the pubs reopened yesterday and, though it snowed in some areas, it didn’t rain. Which has to be a victory of sorts but, with something of a two way pull going on out there, we’ll be watching developments closely.
Because, though Andy Haldane and others suggest that revenge spending will be a big thing, it’s a fact that as near to 100% of would-be pub customers as makes no difference have had to engineer a work-around solution when it comes to getting beered up over the last few months and, in common with most immobile lumps, they will need some sort of reason to budge from the status quo.
But who am I kidding. The pubs reopened yesterday…
On to the news:
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A schizophrenic Monday, in a week in which some kids are still off for Easter and others are back at school, when more than half of the industry is still shut, when the comps from 2019 are running up to the Bank Holidays and when the weather is glorious at 4pm and below freezing a couple of hours later and when it snowed heavily and laid in parts of the South of England, is not typical.
That said, at least it didn’t rain. Thoughts and observations in the premium email
PUBS & RESTAURANTS:
Covid & government rules:
• Hospitality tech platform Airship.co.uk has analysed data derived from check-ins across hospitality venues saying that, of the 17,446 hospitality venue check-ins on Monday, 32% were made by people in the South East. This was followed by the North West with 19 per cent of check-ins, and Yorkshire with 13 per cent of check-ins. Airship has over 11,000 venues across the UK on the platform, including Wetherspoons, Costa Coffee, Pret, Greggs and Cafe Nero. Dan Brookman, CEO of Airship, said: “It was an amazing day despite the snow flurries, and the feedback from operators was that customers were delighted to be back and it more resembled a Sunday in July than a Monday in April. Consumers know what to expect this time around and there was far less strain on the venue teams than previously, even with more stringent guidelines to follow.”
• See above for first day’s trade. Elsewhere, the Scottish Beer & Pub Association has commented on the announcement yesterday by First Minister Nicola Sturgeon that her government will delay reopening until a fortnight after England, that is till 26 April, saying ‘this is a positive announcement for our sector but unfortunately falls short of what is required to make licensed premises viable. We desperately need a return to licensing hours indoors, as well as allowing alcohol to be sold indoors from 26 April. The First Minister points to indoor reopening being ahead of England, but without alcohol service it is meaningless to licensed hospitality businesses and little comfort to Scottish brewers and other parts of the supply chain who will see no benefit.’
• The SBPA says ‘whilst many sectors are allowed to return to near normal at Level 3, retaining a curfew makes trading exceptionally difficult for Scotland’s pubs and bars who feel they are being unfairly targeted by these restrictions. Businesses require certainty but unfortunately our sector will have to wait until the Government allows us to fully reopen before the recovery truly begins.’
• Operators have commented on downward pressure on rents and property costs but upward pressure n wage bills has also fallen. Fourth reports that ‘the average hourly wage for hospitality workers over the age of 23 sat at £8.98 during March 2021 – only 7p higher than the new National Living Wage (NLW) threshold introduced on 1 April – putting an end to an unprecedented period of wage inflation.’ It says ‘the data also highlights a change in the age profile of the industry, with a reduction in the number of younger workers.’ It says that, whilst still young overall, 82% of workers are now over the age of 23.
• Putting this in context, Fourth says ‘the industry has experienced an unprecedented period of labour inflation in the years building up to the pandemic, driven by the fight to attract and retain the best talent. This bubble has been emphatically burst by the pandemic, but with the legislative increases to the National Living Wage coming into force, and the staggered reopening of sites on the horizon, the indications are this is about to change.’ Fourth says ‘what’s not clear is the long-term impact the pandemic will have on wage rates. There has been a reduction in the number of sites in the UK, but research also indicates that there has been a shrinking in the pool of available workers, with the ongoing churn of workers coming and going from the European Union slowing down, due to travel restriction and tighter immigration restrictions.’ The balance of forces is, as yet, unclear.
Longer term impacts:
• The Lumina Intelligence UK Food to go Market Report 2021 suggests that the landscape of the UK food to go market is changing. It says that combined forces, such as increased outdoor socialising and more hybrid/home working patterns ‘are forcing operators and brands to adapt their strategies to continue to drive footfall to stores and to reach new customers.’
• Changed working patterns. Wired reports that, when ‘Canary Wharf’s offices are fully occupied, they are home to 120,000 people every day. Those numbers fell dramatically due to lockdown. On the last working day of February just 19,282 people passed through Canary Wharf station, according to Transport for London (TfL) figures, down from 110,609 on the same day last year. At the peak commuter time of 8:00am, just over 1,000 people tapped through the Canary Wharf gates, down 93 per cent on the same hour of the same day last year.’ The $64,000 question is, how much of this, if any, will be permanent?
• Langton comment: See premium email
Company and other news:
• Deliveroo. Shares rose by 5.7% yesterday to 265p.
• Langton comment: See premium email
• Tesco has been praised for tweeting ‘pubs have had it tough this year. So, as good as our deals are, this week we’d rather you support your local pub (as long as you feel safe to do so). Because right now, Every Little Helps.’
• Revolution Bars Group yesterday announced alongside its numbers that it is developing two new concepts to “appeal to a wider customer base”. The concepts will be trialled once trading conditions allow.
• Wing Shack Co is reportedly looking for five new locations in London and two outside the capital this year.
• London recipe box company The Cookaway aims to expand after passing its £700k crowdfunding target.
COMPANY RESULTS – COVERED IN YESTERDAY’S PREMIUM:
• Just Eat Takeaway.com has updated on Q1 2021 saying that orders grew in the quarter by 79% on the same period last year to 200m trades. The CEO Jitse Groen, says ‘the first quarter of 2021 marks our fourth consecutive quarter of order growth acceleration. Our fastest growing segment was the United Kingdom, and we are especially pleased with the roll-out of our UK Delivery network, which has reached an impressive 695% order growth rate year-on-year. We are also very proud of the acceleration in two of our highly profitable markets, with 77% order growth in Germany and 53% in the Netherlands. Just Eat Takeaway.com is in excellent shape and the start of 2021 has been very strong.’
• The company says that ‘order growth accelerated’ and says ‘Marketplace and Delivery contributed almost equally to order growth. Just Eat Takeaway.com’s Marketplace Orders are highly profitable, while the Delivery Orders are priced very competitively following the Company’s price leadership strategy, allowing for future adjusted EBITDA gains.’
• It repeats that ‘the UK was the fastest-growing segment and the Company’s main growth driver. Just Eat UK processed 64 million Orders in the first quarter of 2021, up 96% compared with the same period of 2020. New partnerships were signed with household brands such as Leon, Tortilla and Chipotle, as well as coffee chains Starbucks and Costa, adding to Just Eat’s growing restaurant supply. Delivery Order growth was 695% in the first quarter of 2021 compared with the first quarter of 2020, multiple times faster than the growth rate of its UK competitors. In London, Just Eat achieved triple digit Order growth.’
• The Revolution Bars Group plc has reported unaudited H1 results for the 26 weeks ended 26 December 2020 saying that the company is ‘well positioned to emerge [from the pandemic] stronger.’ It says it is ‘excited and ready to bounce back, beginning by trading from 20 bars from 12 April 2021 and the remainder from 17 May 2021.’ The company says ‘we have taken advantage of the reduced trade periods to fine tune our brands and strengthen the engagement of our teams’ and adds ‘our young guest base is keen to start living again, and we cannot wait to welcome back our guests and teams to create the fun and memorable experience that they know and love us for.’
• RBG reports that H1 sales were £21.6m (down from £81.2m in the comparative period last year) with adjusted EBITDA loss of £1.2m (2020: profit £7.6m) and an adjusted loss before tax of £11.5m against a profit last year of £3.5m. The loss per share is 12p versus a profit in 2020 of 4.5p. The company says it has secured its liquidity position via increased debt facilities including a term loan of £16.5 million and a net equity fundraising of £14.1 million. It says it secured amortisation waivers from Nat West this month on a scheduled £2m payment.
• RBG believes that ‘customer demand remains strong.’ It says ‘destination cities such as Liverpool, Brighton and Newcastle-upon-Tyne, are fully booked throughout July 2021 for Cocktail Masterclasses and 11,969 guests booked with us in the first week we reopened the booking system for 17 May 2021 onwards.’ CEO Rob Pitcher says ‘prior to the pandemic the business was outperforming our peer group.’ He adds ‘this year has provided us with the opportunity to advance the business across multiple areas which will allow us to maximise our future performance and capitalise on growth opportunities as we move towards more normalised conditions.’ The CEO concludes ‘we are excited and ready to bounce back and as we move on from the pandemic, I look forward to our brilliant teams being able to create amazing memories for our guests as we open our bars and all come back together to celebrate life and
HOTELS & LEISURE TRAVEL:
• TTG reports that TUI is still planning for a 17 May resumption of international travel. UK rival Jet2 has cancelled departures up to 23 June.
• Costs still a bit of a buzz-kill. Randox, the largest supplier of PCR tests in the UK, has cut the price of its tests to £60 each. Prices at the moment are around £100, although Gatwick is offering a £60 PCR test at its terminals and Jet2 has partners offering them from £75.
• Travel Weekly has hosted a webcast in which operators have concluded that there will be more failures if holidaymakers are denied the chance to travel over the peak summer period.
• Aito reports that 46% of vaccinated over-50s are planning holidays and 94% presumably intend to do so overall as that is the percentage saying they will spend the same amount or more on holidays this year than they did pre-Covid.
• Israel is to open up to vaccinated tourists from 23 May.
• Willerby (a mobile home and caravan company based in Hull) has said that it expects a bumper spring. The company says ‘many people are considering buying a holiday home for the first time and, as a trusted brand with a strong tradition and reputation, we can help them make the best decision for themselves and their families.’
• Uber has reported the highest March bookings in its 12yr history.
FINANCE & MARKETS:
• The ONS reports that UK GDP rose by 0.4% in February after a 2.2% fall in January. The number, less than the 0.6% hoped for, nonetheless leaves most forecasts intact. The NIESR says that Q1 GDP should be down by around 1.5%. It says ‘compared with the first lockdown in Q2 of 2020 the effects of restrictions imposed since January have clearly been much more sector-specific.’ It says growth was strongest in the public sector and health areas.
• The ONS has also reported that the UK’s trade deficit with the rest of the world widened in February to negative £16.4bn. This deficit would be reduced a little by a services surplus under normal circumstances. The net deficit will need to be funded by the transfer of assets or gilts to overseas ownership. The ONS reports that both imports from and exports to the EU rose in February.
• Former Bank of England governor Mervyn King has cautioned that central banks and finance ministries may be at danger of becoming hooked on stimulus packages.
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 8 Apr 21 Everyman Media FY numbers
• 8 Apr 21 Constellation Brands FY numbers
• Est. 9 Apr 21 Barclaycard Consumer Spending (March)
• 13 Apr 21 Just Eat Q1 numbers
• 13 Apr 21 Revolution Bar Group H1 numbers
• 15 Apr 21 Deliveroo Q1 numbers
• 15 Apr 21 Pepsi Q1 numbers
• 15 Apr 21 Naked Wines FY trading update
• 15 Apr 21 Heavitree Brewery AGM
• 22 Apr 21 Domino’s Pizza PLC AGM
• 23 Apr 21 Gear4Music results
• 28 Apr 21 Carlsberg Q1 numbers
• 28 Apr 21 YUM Brands Q1 results
• 29 Apr 21 Molson Coors Q1 numbers
• 29 Apr 21 Texas Roadhouse Q1 numbers
• 30 Apr 21 Safestay General Meeting
• 4 May 21 Campari Q1 numbers
• 5 May 21 Ten Entertainment AGM
• 6 May 21 Bank of England MPC meeting
• 7 May 21 Intercontinental Hotels Q1 numbers
• Est 9 May 21 Barclaycard Consumer Spending (Apr)
• 10 May 21 Marriott Q1 numbers
• 12 May 21 Compass Group H1 numbers
• 12 May 21 Stock Spirits H1 numbers
• 12 May 21 TUI H1 numbers
• 12 May 21 Just Eat AGM
• 18 May 21 Britvic H1 numbers
• 19 May 21 Marston’s H1 numbers
• 26 May 21 C&C FY numbers
• 24 Jun 21 Bank of England MPC meeting
• 27 Jul 21 Campari H1 numbers
• 5 Aug 21 Bank of England MPC meeting
• 10 Aug 21 Intercontinental Hotels H1 numbers
• 12 Aug 21 TUI Q3 numbers
• 18 Aug 21 Carlsberg H1 numbers
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 26 Oct 21 Campari Q3 numbers
• 8 Dec 21 TUI FY numbers
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