Demand, delivery, DOM, JDW, Sheps, Chipotle, Subway, G4M, Rank etc.:

A DAY IN THE LIFE:

Out in trade yesterday and rather bracing it was too.

Hence a little short of time but here’s a few questions for you: when did you last write a cheque? And, for that matter, when did you last use a stamp or draw money out of an ATM. Indeed, when did you last make a purchase for cash over, say, twenty quid? Take the answers to all of the above in months, add them up and see if you get to over 100.

The above may help pass the time but we’re running out of it so, without further ado, let’s move on to the news:

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PUBS & RESTAURANTS:

Pub & restaurant trading, customer demand:

• CGA reports that ‘nearly half of consumers in England have been back to pubs, bars and restaurants since they reopened for outdoor service’. It says ‘44% of adults have visited the hospitality sector since last Monday (12 April). The figure is 9 percentage points higher than the 35% of consumers who returned in the first ten days of reopening after the end of England’s first national lockdown in July 2020.’ CGA goes on to say ‘in further signs of enthusiasm for hospitality’s return, people who have been out have made an average of 2.4 visits each, and nearly all said their visit was better than expected (45%) or as expected (52%).’

• CGA has separately said that ‘food and drink sales at venues that are able to trade have been running well ahead of July 2020’s levels. However, with the majority of hospitality sites in England closed, and the sector still completely shut in Scotland and Wales, total sales remain well below pre-COVID levels.’ It says ‘some consumers are delaying visits to the On Premise because of doubts about crowds and the weather.’ Some consumers are being put off by the need to book (although many operators are allowing walk-ins (where there is space). Some 31% do not wish to sit outside. CGA says ‘it’s great to see that consumers have embraced outside eating and drinking in hospitality’s first week back. Pubs, bars and restaurants have worked very hard to make the most of their outside spaces, and the good weather has undoubtedly encouraged a speedy return. With four weeks still to go until
hospitality can fully return, businesses will be hoping for more sunshine and continued momentum of visits from increasingly confident consumers, while reassuring those who have not yet been out that it is safe to do so.’

• Langton interpretation & comment: See premium email

Other Covid news:

• Scottish first minister Nicola Sturgeon has said that pubs in Scotland will be able to reopen next week, from Monday. This is good news but the trade has not been given much notice. It takes more than 5dys to brew beer. This is effectively a move from level four to level three in terms of restrictions. Operators may be able to serve indoors from 17 May (though this is not yet certain) and Ms Sturgeon says she hopes Scotland will be back to virtual normality by July.

• Manchester night-time economy advisor Sacha Lord has tweeted that the judge considering his appeal against pubs not being allowed to serve indoors will rule this week. Mr Lord tweets ‘a decision WILL come this week.’ He tweets that, whether the appeal is ‘granted or not, we will finally be able to legally share the “evidence” the Government are trying to use against Hospitality.’ Lord says ‘Professor John Edmonds has confirmed ‘There has been virtually no cases of spread outdoors during the whole pandemic’’.

• TipJAR has reported that the ‘average tip per individual transaction increased by 56% compared to the previous week, suggesting that drinkers and diners are more appreciative of hospitality as a service at venues, as opposed to when it is received as an experience through takeaway and via delivery platforms.’

Purchasing & logistics:

• Prestige Purchasing has launched a White Paper for supply of food and drink. It writes ‘as the hospitality sector emerges from a winter of lockdowns and closures, their analysis has shown that a number of key factors will be critical to the sector’s recovery, and are calling for businesses throughout the value chain to unite in delivering them.’ It underscores five points saying there is one value-chain, it is important to build long-term collaborative relationships, smart supply chains are useful, operators should focus on low waste & sustainability and also innovation & new product development.

• Prestige says ‘the hospitality sector has suffered serious structural damage from the pandemic, and supply chain management represents one of the few remaining opportunities to create a step-change in returns within a challenging post-Covid environment. Food and Drink supply is entering a period where enhanced collaboration, use of sophisticated data, and leveraging technology will all be critical factors of success. We must be positive and grasp these opportunities fully as we exit the pandemic.’ It says ‘it can be difficult to spot when operator supply chains are sub-optimal, and business leaders are frequently unaware of a significant performance gap. 2021 must surely be the ideal time to tackle avoidable waste, inefficiency and unsustainable ingredients, creating better margin, and strong, enduring and long-term supply relationships.’

What will happen to delivery as hospitality reopens:

• Langton interpretation & comment: See premium email

Business distress:

• Langton interpretation & comment: See premium email

Company & other news:

• See premium for more of today’s news on Domino’s, G4M, Rank & other Thursday news.

• Deliveroo down another 10p yesterday to hit new lows of 233p (down 40% on IPO price in less than a month).

• Domino’s Pizza Group has updated on Q1 trading saying that ‘trading in the first quarter has been strong, with exceptional trading over the new year period, resulting in UK & Ireland system sales of £371.3m, up 18.7% on the first quarter of last year which was largely unaffected by the impact of Covid-19. Like-for-like system sales, excluding splits, were up 18.5% maintaining our performance momentum.’

• Langton interpretation & comment: See premium email

• JD Wetherspoon is to open more sites next week including those that will be by then permitted in law, 60 sites in Scotland, 32 in Wales and three in Northern Ireland, but also more units in England. By the end of the month, the operator should have moved from just under 400 units open to perhaps 533. JDW has 871 sites in total.

• Shepherd Neame, which yesterday released H1 numbers, has underlined the importance of its brewery’s off-trade business in times of Covid. The company says it ‘has maintained bottling production throughout and enjoyed good sales through the grocery and export channels. Our online shop, whilst small, has also performed well. Bottled beer sales have been strong as they were through the first period of lockdown and total volume was up +25.7%. During the period, export sales were good, but these have fallen in January and February 2021, in line with all UK-EU trade since Brexit.’

• Shepherd Neame also said it believes ‘there is significant pent up demand in the economy. The consumer savings ratio is at high levels, and all indications are that the demand for events, for festivals, for live sport, for going out for a meal and for socialising with friends is as strong as ever. Furthermore, with the ongoing restrictions in place on international travel, most people will choose to holiday in the UK this year. As a result, we believe that our recovery will be strong through late summer and autumn 2021.’

• Italian food hall concept Eataly will open its first site in the UK next week. The unit is next to Liverpool St in the City of London.

• Data from the US Census Bureau shows that restaurant sales continue to increase. The bureau has reported that sales rose from $54.8 billion in sales at eating and drinking establishments in February 2021 to $62.2 billion in March 2021. This is only around $3bn lower than the pre-pandemic number seen in February 2020.

• Chipotle in the US has reported Q1 numbers to end-March, saying that revenue rose by 23.4% to $1.7 billion with like for like sales up 17.2%. The company says digital sales grew 133.9% and accounted for 50.1% of sales. The company opened 40 new restaurants and closed 5 restaurants during the period. CEO Brian Niccol says ‘Chipotle is off to a great start in 2021…as vaccines roll out and we get closer to moving past this pandemic, I believe Chipotle is well positioned for growth. I’m excited about our future as we remain focused on innovating in culinary, leading in food with integrity, and providing convenient access inside our restaurants and through our expanding digital ecosystem.’

• Chipotle says it ‘continues to maintain a strong financial position with nearly $1.2 billion in cash, investments and restricted cash, and no debt. We also have access to a recently refinanced $500 million untapped credit facility with which to continue to navigate this crisis.’ The company adds ‘restaurant level operating margin was 22.3%, an increase from 17.6% in the first quarter of 2020. The improvement was driven primarily by leverage from the comparable restaurant sales increase and menu price increases, partially offset by increased delivery expense and wage inflation.’

• US franchise owner Subway yesterday denied it was for sale after media reports saying that it was open to offers. A spokesperson said ‘Subway is committed to the long-term success of our franchisees and provides multiple forums for franchisees to share feedback, working hand-in-hand with them to ensure decisions are focused on maximizing their profitability.’

• The Inn Collection Group has said that it will create around 200 jobs across Yorkshire and the North East.

• Drinks Business reports that global wine consumption fell to its lowest point since 2002 last year due to the virtual closure of the hospitality industry worldwide for sustained periods of time.

• Vegan ice cream brand Beau has announced that it has secured £400k of funding to fund expansion from a group of investors.

• Amazon is to open its first hair salon, in Spitalfields, London.

COMPANY RESULTS – COVERED IN YESTERDAY’S PREMIUM:

Shepherd Neame:

• Shepherd Neame has reported H1 numbers for the 26wks to 26 December 2020. The group says that ‘the period under review included strong trading during the summer months, followed by ever changing levels of restriction and finally enforced closure again from November. The disruption had a significant impact on the financial results.’ The group says that turnover was £55.3m vs £79.0m in the prior year. It says there was an underlying operating loss of £7.2m (vs a profit of £8.0m in the prior year) and the underlying loss per share was 32.6p (2019: profit per share 33.1p).

• Sheps says that increased sales of bottled beers and ‘tight cost control have restricted underlying monthly cash burn to c.£1.5m to £2m while pub estate was closed.’ It says net debt rose to £96.5m as at 27 March this year with headroom of £36.0m. It says it has agreed new waivers with lenders on 20 April 2021 and normal covenant tests have been ‘relaxed through to September 2022, replaced with minimum liquidity covenant.’ There is ‘ample liquidity for foreseeable [the] future.’

Shepherd Neame on reopening:

• As regards reopening, Shepherd Neame says it opened over 200 pubs’ gardens last week and says all pubs will be open on 17 May 2021. It confirms that ‘initial trade levels are encouraging.’ CEO Jonathan Neame says ‘we are delighted and excited to have opened over 200 pub gardens on 12 April and look forward to reopening the rest of our pubs in May with increasing confidence. There is significant pent up demand in the economy and the desire to go out for a drink or a meal is as strong as ever. Initial trade has been most encouraging.’ He cautions ‘there are still many challenges to face and a long road to full recovery, but the balance sheet remains strong and we have ample liquidity.’ Mr Neame concludes ‘the relationship with our licensees is excellent and our reputation for beer and pubs is strong. We look forward with confidence to returning Shepherd Neame back to growth.’

• Langton comment. See premium email:

Wagamama:

• Wagamama, owned by Restaurant Group, has reported on 2020. CEO Emma Woods reports ‘while Q4 2020 and the early part of 2021 have proved challenging for the hospitality sector as a whole, we are extremely positive as we reach the first phase of reopening our eat-in business. Our teams have worked tirelessly to ensure that the business is well set up to emerge strongly from the pandemic and we look forward to resuming our growth strategy for the business both in the UK and internationally.’

• Wagamama reports ‘UK revenue decreased 37.8% to £219.9 million in YTD Q4 2020.’ It says ‘Covid-19 restrictions significantly impacted the ability to trade with periods of full closure and out of restaurant only trade. Where possible to trade for eat in dining, sales recovered strongly.’ It says it saw ‘strong sales performance in the first 8 weeks of Q1 2020 delivered 8.4% UK like for like sales. Our reopening for eat in dining together with the Government’s ‘Eat out to help out’ scheme significantly benefited the business with 7.4% UK LFL sales in Q3 2020.’

Netflix:

• Netflix yesterday reported Q1 numbers including a slowdown in subscriber growth. It reported c3.98 million people signed up for its service in Q1, well short of the projected 6 million. Netflix said it had fewer new shows but says that sequels to existing hit shows are shortly to be released. The group’s shares fell 11% in after-hours trading to $489.28, wiping $25bn off the company’s market capitalization. Netfilx added 15.8 million new subscribers last year as Covid-19 forced people to stay indoors. Netflix says ‘these dynamics are also contributing to a lighter content slate in the first half of 2021, and hence, we believe slower membership growth.’ Netflix has reported revenues of $7.16bn and net income of $1.71bn.

Ten Entertainment:

• Ten Entertainment has announced that Adam Bellamy is to be appointed as Non-Executive Chairman effective from the AGM date on 5 May 2021. It says ‘the Group has conducted a rigorous and wide-ranging selection process to ensure that it appoints the strongest possible candidate to lead the business through its next stage of growth. Adam is currently Senior Independent Director and has served on the TEG Board since 2018 as Audit Committee Chair and latterly Remuneration Committee Chair. His extensive knowledge of our business, as well as his wealth of experience in high-growth consumer-facing companies, make him ideally placed to oversee reopening and a return to growth.’

HOTELS & LEISURE TRAVEL:

• Health Secretary Matt Hancock has said the government has not yet decided how would-be travellers will be able to provide proof of Covid vaccination. This may incentivise consumers to postpone plans until the requirements are clearer.

• MPs have urged the government to give details as to which countries will be open for international travel by May 1. Separately, the University of Bristol has polled adults and suggested that nearly 60% of adults say they intend to fly less after being vaccinated against COVID-19 due to changed habits and to fears over spreading new variants.

• Seabourn will offer Barbados sailings from 18 July.

• The US has added about 130 countries to its Do Not Travel list. Covid stats are good in the UK (and getting better in the US) but infections and deaths globally are on the rise.

• Melia Hotels is to open a unit, the INNSiDE Liverpool, in the city this August.

OTHER LEISURE:

• Gear 4 Music has updated on full year trading saying that total sales rose by 31% to £157.5m with UK sales up 27% to £78.7m.

• Langton interpretation & comment: See premium email

• The Rank Group Plc has updated on the quarter to 31 March 2021 saying that ‘the Group ended the quarter with total cash and available facilities of £89.8m, comfortably achieving its minimum liquidity covenant of £50.0m.’ It says ‘the Group expects to make its scheduled £19.7m term loan amortisation payment on 31 May 2021. Based on HM Government’s current timetable for venues’ reopening, the Group expects to continue to meet its banking covenants.’

• Langton interpretation & comment: See premium email

• The would-be football super league looks as though it may be collapsing. All six English clubs have pulled out and Arsenal and Tottenham have apologised to ‘legacy’ fans (partly for calling them legacy fans).

FINANCE & MARKETS:

• The ONS has reported that the rate of UK CPI rose to 0.7% in March from 0.4% in February. Transport, clothing & footwear and other costs are higher. The ONS says, however, that ‘food prices fell back on the year, as prices of some staples were lower than at the start of the pandemic.’

• The NIESR says ‘annual headline inflation increased to 0.7 per cent in March, up from 0.4 per cent recorded in February, due largely to price increases in the transport category.’ It says ‘our measure of underlying inflation, which excludes extreme price movements, increased to 0.6 per cent in March from 0.2 per cent in February. We expect inflation to rise in the coming months as the economic recovery gains pace on the back of opening-up and the success of the vaccination programme, but we still expect inflation to remain below the Bank’s 2 per cent target in the year to March 2022.’

• The Lloyds Band Recovery Index has suggested that 11 of the UK’s 14 industries that it considers grew last month, up from six in February and three in January. It says ‘the UK’s recovery is clearly accelerating, as the economy continues to open up after a tough lockdown and optimism builds.’

• The HMRC has reported that UK house sales and prices bounced this spring. It suggests that prices are running up 8.6% year on year. The Telegraph reports that there are signs that ‘the property market is overheating, with demand stoked to an unsustainable level.’

• Sterling little changed at $1.3928 and €1.1570. Oil lower at $65.12. UK 10yr gilt yield up 1bp at 0.74%. World markets better yesterday and London set to open up around 28 points.

RETAIL WITH NICK BUBB:

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TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

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

• 21 Apr 21 Chipotle Q1

• 22 Apr 21 Domino’s Pizza PLC AGM

• 22 Apr 21 Music Magpie first day’s trade (issued at 193p)

• 22 Apr 21 Pernod Ricard Q3 numbers

• 22 Apr 21 Gear4Music results

• 23 Apr 21 Remy Cointreau FY numbers

• 23 Apr 21 GfK Consumer Confidence numbers

• 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

• 14 May 21 Tasty AGM

• 18 May 21 Britvic H1 numbers

• 19 May 21 Marston’s H1 numbers

• 20 May 21 Fevertree AGM

• 20 May 21 888 AGM

• 25 May 21 Restaurant Group AGM

• 25 May 21 Shaftesbury H1 numbers

• 26 May 21 C&C FY numbers

• 3 Jun 21 New River full year numbers

• 8 Jun 21 DP Eurasia AGM

• 15 Jun 21 Vianet full year numbers

• 24 Jun 21 Bank of England MPC meeting

• 27 Jul 21 Campari H1 numbers

• 3 Aug 21 Domino’s Pizza 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

• 19 Aug 21 Rank FY numbers

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 8 Dec 21 TUI FY numbers

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