Reopened sites, roadmap, Deliveroo, Leon, Hawthorn etc.:

A DAY IN THE LIFE:

Langton is coming down to that London later this morning, and about time too.

Because the Capital has clearly been struggling without us and, though this will only be the third trip in the last 12 months, a pale shadow of the more usual 30-40 visits, it’s better than nothing and, with London flat on its back, we’ve got to do our bit to help.

But pulling together the files, computer essentials and toothbrushes necessary to make such a trip, it occurred to us that the feeling ‘I’m too busy to go back to work’ is likely to be quite widespread. Because between refilling the bird-feeders, estimating the number of bricks needed to rebuild our outside loo and haggling with the lawnmower repair man, I haven’t had a moment to spare, so where will I possibly find the time to commute and do a day’s work into the bargain?

Well, needs must, I suppose but there are reasons to be cheerful, Hull City and reopened pubs to name but two. On to the news:

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OUTDOOR RE-OPENING – THE FIRST FULL WEEK:

How many units were open?

• CGA and Alix Partner’s Recovery Monitor reports that ‘a total of 20,832 venues were trading again by Thursday 15 April—23.2% of England’s 89,953 known licensed sites.’ The monitor confirms that a larger proportion of pubs (versus restaurants) were open, a function of the fact that there is a greater change that they would have sufficient outside space to make reopening practical. The recovery stats suggest that 39% of food pubs reopened in England alongside 32% of community pubs and 30% of high street pubs. The monitor suggests that only around 12% of independent restaurants reopened and only c24% of casual dining, chain units (although some sites closed for sit-down may have continued with delivery). Within pubs selling both food and drink, drink sales were the stronger. There will doubtless be a weather impact here.

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How has reopening been received?

• Trade bodies UKH, BBPA and BII have ‘welcomed the reopening of pubs and restaurants who have outside areas, but have warned that there is still a long way to go for businesses to recover from the devastating impacts of the pandemic.’ This is clear from the statistics. This is a ‘not good but better’ state of affairs. The trade bodies, unsurprisingly, ‘are calling for Government to extend the business rates holiday for at least a further three months to allow businesses to get back on their feet.’ They say ‘the majority of businesses are still in very real danger of failing’ and say that, even when indoor trade resumes, because of distancing and other measures, trade will not be back to normal. They say, post Step 3 (indoor trading) operators ‘are estimated to only reach 56% of turnover when compared to pre-pandemic figures.’

• UKH, BBPA and BII says ‘almost a quarter of those [operators] surveyed believe that their business will be unviable before the end of the year based on current trading estimates. A joint spokesperson for the trade bodies said ‘our sector will have a long and rocky road to recovery, especially while any restrictions remain in place in our venues. After a year of closures and strangling restrictions, they are entering the summer, crippled with debt, having to employ more staff to manage the huge number of complexities surrounding Test & Trace data collection, enhanced cleaning regimes, table service and many more requirements placed on their businesses.’ The trade bodies believe that ‘even when restrictions are fully lifted in June, our members  will still only be achieving 80% of the turnover seen in 2019, a figure which at any other time would have been untenable.’

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Food versus drink:

• We mentioned last week that early feedback suggested that drink sales were stronger than food. This has remained the case. CGA now reports that ‘drinks enjoyed a 75% share of sales by value on Monday (12 April)—21 percentage points higher than the 54% share they took on the equivalent day in 2019.’ It says ‘beer, cider and other long alcoholic drinks took a 61% slice of drinks sales—slightly ahead of a 58% share back in April 2019. World lager grew its share of draught lager sales from 31% to 44% to make it the category with the sharpest upswing, at the expense of standard lager, whose share dipped from 41% to 26%.’ This is clearly a very short sample period and it will be heavily impacted by the weather.

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Putting this into context:

• This is a very short time period, the weather has been good, comps are meaningless re 2020 and Easter-distorted re 2019, the consumer has been suffering from cabin fever, the savings ratio has risen etc. And we are only hearing from a minority of operators (or at least a minority of operations) as most units remain closed. CGA’s Karl Chessell says ‘the return of outdoor service is a welcome first step on the road to recovery for England’s hospitality sector, and for pubs in particular. Venues that have been able to open have worked hard to give people the eating and drinking out experiences they have missed for so long, but they remain subject to major operational constraints and the unpredictability of the British Spring weather.’

• CGA says ‘three in four venues in England remain closed, and while some may open over the next few weeks, we will have to wait another four weeks until it is feasible for many hospitality venues to reopen again. Until then, operators deserve support from local authorities to make the most of outdoor trading space—not to mention some sunshine.’ Alix Partners adds ‘while reports of strong consumer demand this week are welcome and while operators are driving sales where possible through use of their outside spaces, the stark reality is that this trading represents a small proportion of normal revenues and most will be making a loss. Many challenges remain during this reopening phase and the months ahead.’

Other points:

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PUBS & RESTAURANTS:

Other Covid-19 issues:

• A letter in the Sunday Telegraph from some 38 of the UK’s biggest hospitality firms is urging the prime minister to “stick” with England’s roadmap to reopen the economy. The letter also cautions against the introduction of vaccine “passports”. The letter is signed by, amongst others, the CEOs of Mitchells & Butlers, Fuller’s, Young’s, JD Wetherspoon, Pizza Hut and Alton Towers owner Merlin.

• The Financial Times has reported that staff shortages may be a feature post Covid as many staff have left the country. The FT quotes M&B CEO Phil Urban as saying ‘we have some businesses where we have lost quite a few of the team [and because of furlough] it is not until now that operators have realised that they may not have all the staff come back.’ UKH says the problem of labour shortages “was just emerging.”

• Property owner Hammerson is reported to be cutting rents for some of its retail tenants by 30%. It isn’t clear for how long. There has separately been a move towards more flexible leases and revenue based rental charges.

Company news:

• Deliveroo’s shares gave up another 5% on Friday to hit a new low of 247p. The shares’ IPO price was 390p having earlier indicated a range of between 390p and 460p. See also comments last week.

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• Owners of ASDA and Euro Garages, the Issa brothers, have bought fast food chain, Leon, which has over 70 restaurants across the UK and Europe. Leon, which has been on the go since 2004, owns and operates some 42 restaurants with the remainder operated by franchisees. Leon boss John Vincent is quoted saying ‘in some ways this is a sad day for me. We have tried hard, done some good things, made a healthy amount of mistakes, and built a business that quite a few people are kind enough to say that they love.’ The Mail on Sunday has said that the chain could be ‘worth’ up to £100m though there is no confirmation as to the transaction value.

• In addition, The Sunday Telegraph reports that the Issa brothers have bought around £140m of loans made to Caffe Nero from Swiss private equity firm Partners Group via investment bank Morgan Stanley. It says that the brothers remain interested in taking control of the company. City AM says Partners Group wished to exit the debt. It quotes a City AM spokesperson as saying ‘we have had a successful winter and spring trading and are generating positive cash flow and are ahead of forecast for the last five months.’ The company says ‘we are forecasting no covenant issues in our projections over the next 12 months and we look forward to an even brighter future post May 17 when we open up our cafes fully to the public.’

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• C&C Group has this morning announced that its subsidiary, Matthew Clark Bibendum Ltd, became aware on Friday ‘that it was the subject of a cyber-security incident, which has impacted both Matthew Clark and Bibendum.’ The company says ‘MCB responded quickly, enacting its cyber-security response plan and shutting down all of its IT systems. A leading forensic information technology firm and legal counsel have been engaged to assist MCB investigate the incident and restore its IT systems as quickly and as safely as possible. The issue has not affected the IT systems of the wider C&C Group, which continue to operate as normal.’

• Hawthorn Leisure, which may float on the London Stock Exchange, is looking to significantly expand its estate. CEO Mark Davies says ‘we are 700 or so pubs today, we would like to get to 1,000 pubs at some point soon and we can probably get there quite quickly. Longer term, we could at least double the size of the platform from there or possibly go even further.’ He adds ‘we will be patient, opportunistic where we can be but we are ambitious and dynamic and the management team can do deals. That’s how we built Hawthorn to what it is today so all of that is recognised.’

• Heineken says it will be carbon neutral in its own production by 2030 and its full value chain by 2040.

• Rosa’s Thai Café plans to open up to six new restaurants over the next year.

• Former Carlsberg Marston’s Brewing Company head of HORECA Matt Kelly has developed and launched a new retail concept that is centred around a drive through Craft Beer Growler filling station for market towns. Matt reports that the first location for the Filling Station is the market town of St Ives in Cambridgeshire and it will primarily support local breweries from across the surrounding county. Matt reports ‘the business offers a draught tap wall of 10 frequently changed brews from the fantastic breweries across Cambridgeshire and neighbouring counties, mixed with the best of the UK brewing scene.’

• Crazy golf concept, Pop Golf, will open this May at BOXPARK Wembley.

HOTELS & LEISURE TRAVEL:

• Plenty of horror stories about delays at Heathrow. A lot will depend on whether this is the new normal, or not. Hopefully not. One contributor writes that the attitude towards passengers is ‘you flew, this is your fault’ from staff. We tweeted on Friday ‘travel but don’t travel. But travel. Clear? Gov. is maybe opening the door whilst holding it shut. Vaccine passports, 6hr queues, quarantine & traffic lights stuck at red could allow illusion of freedom without granting any. Power kick or sensible? Or both?’

• Research produced for IATA suggests that Covid testing could increase that cost of travel by as much as 160%. As a part of a holiday (including accommodation, car hire etc), it will be a smaller but still material increase. The study points out that, for a family of four flying into and out of Spain, some 16 tests could be demanded. A survey undertaken by Great Rail Journeys has suggested that its customers believe the cost of Covid tests to travel abroad should be under £50.

• Some puzzlement as to why Boris Johnson is bigging up lockdown & de-emphasising the vaccination programme

• AIDA cruises is to offer new cruises in Greece from May 23.

• Disney Cruise Line is set to put its UK sailings this summer on sale on April 30.

• STR reports that ‘nearly half of all U.S. hotel markets performed at “recovery” or “peak” levels during the week of April 10.

• Eurostar is reported to have signed a deal with its lenders to refinance debt

OTHER LEISURE:

• MusicMagpie has confirmed its intention to float.

FINANCE & MARKETS:

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TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 15 Apr 21 Deliveroo Q1 numbers

• 15 Apr 21 Entain Q1 update

• 15 Apr 21 Pepsi Q1 numbers

• 15 Apr 21 Naked Wines FY trading update

• 15 Apr 21 Heavitree Brewery AGM

• 21 Apr 21 Wagamama (Restaurant Group) bondholder report Q4 2021

• 22 Apr 21 Domino’s Pizza PLC AGM

• 23 Apr 21 Gear4Music results

• 27 Apr 21 Starbucks Q1 numbers

• 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 Shake Shack Q1 numbers

• 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

• 25 May 21 Shaftesbury H1 numbers

• 26 May 21 C&C FY numbers

• 3 Jun 21 New River full year numbers

• 15 Jun 21 Vianet full year 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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