Langton Capital – 2021-05-25 – Restaurant Group, Shaftesbury, roadmap, staffing, inflation etc.:
Restaurant Group, Shaftesbury, roadmap, staffing, inflation etc.:A DAY IN THE LIFE: Having been forced (by teenage daughter not, honestly, by my own inclination) to sit through the Eurovision Song Contest last weekend, I was reminded that Will Ferrell’s film Eurovision Song Contest: The Story of Fire Saga, is almost as much a documentary as it is a comedy. Because it’s both an enjoyable film in its own right and it’s very much on-point when it comes to satirising the music, the contestants and the contest and the hype and its only rival when it comes to parodying and making good natured fun of the contest is the contest itself. Anyway, give it a watch. Bit pushed this morning so we’ll move on to 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. CHANGED EMAIL FORMAT: The Premium Email is unchanged. The Free Email is written and pre-sent the evening before. It may not include breaking stories nor Langton comment. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email. Prices: £295 for one subscription, £495 for multiple, both plus VAT. Or sign up for easy in, easy out monthly option: RESTAURANT GROUP – AGM STATEMENT: The Restaurant Group has updated on its opening programme and our comments thereon are set out below: Trading: • RTN says ‘in the financial year to date (20 weeks to 16 May 2021), there has been significant disruption affecting the Group’s ability to trade as a result of the various government restrictions imposed on the hospitality sector. For detail & comment see premium email & tweets. PUBS & RESTAURANTS: Roadmap & 21 June: • Social distancing and all other restrictions are due to be dropped on 21 June. Comments recently, with evidence re outdoor opening and very early indoor reopening now gathered, have been positive. o We have heard that the vaccines are effective against the Indian variant. o The Telegraph reports PM Boris Johnson is very likely to go ahead with plans for dropping restrictions on 21 June. o CEO of the UK Health Security Agency Jenny Harries says plans are ‘looking good’. o The vaccination programme is on track. Hospital admissions and deaths continue to fall.
• Mr Johnson is likely to speak to the country later this week. The Telegraph even suggests that it knows the wording, saying the PM will say that ‘if things do continue to go well and we don’t see a huge change in the data, and the latest data we are presented with is still positive, things are looking on track.’ We may need booster doses in the autumn but, as UKH CEO Kate Nicholls says, the above reports are “very welcomed if true.” She adds ‘however, we must wait to see the full detail of plans as any restrictions in venue will continue to impact revenue and business viability. A return to unrestricted trading on 21 June is critical and will mean hospitality businesses come off life support and be viable for the first time in almost 16 months.’ She says ‘we urge the Government to confirm reopening dates and these plans at the earliest opportunity, which will boost confidence and allow • Langton comment: See premium email. Staffing: • Foodservice analyst Peter Backman reports that ‘there’s a shortage of staff to work in foodservice’ adding that this (and other issues) could lead to something of a margin squeeze in the coming months. Mr Backman says that his Margin Squeeze chart, which have been produced since 2006, is a measure ‘that attempts to capture the pressures on the financial resources of restaurants and other businesses serving food to consumers away from home.’ It takes into account input costs and output prices. He says ‘there has been an increase in menu prices – and this has led to a positive bounce for the Margin Squeeze. But will these prices stick? How will consumers change their purchase habits? Will they eat out more often? But spend less – in aggregate? Or per meal?’ • Langton comment: See premium email. Trading since reopening: • More comments on indoor trading. Although it is early days and sample sizes may be somewhat misleading, a number of industry service providers are updating on the level of indoor trade last week. Although the Morning Advertiser yesterday had some individual publicans saying how quiet it had been, S4 Labour says ‘in the first full week since operators were able to serve guests indoors since November 2020, hospitality sales were up 9% compared to the same week in 2019. However, these figures paint a picture of mixed fortunes for the industry, with a significant bounce in food sales and the continued collapse in drinks revenue.’ • It says ‘food sales were up nearly 30% on the same week in 2019, representing significant demand for out of home dining. While there was pent up demand for eating out, remaining restrictions prohibit vertical and late-night drinking, resulting in the continue decline of drink sales, down 7% on 2019 levels.’ S4 Labour says London was only level with 2019. It says ‘for the first time since hospitality re-opened in April, the majority of sites in the U.K. are trading at above 2019, even if many are only marginally so. Last week, only 19% of sites traded at 90% or less than their 2019 levels. This is in contrast with two weeks ago, when two thirds of operators were trading at below 90% of 2019.’ • Meanwhile Tenzo has said that ‘indoor restaurant reopening sees sales grow 36% on Saturday compared to the same day in 2019.’ Picking a single day may run the risk of giving a misleading impression. On the other hand, operators would clearly like to see an increase rather than a decrease, however short the trading period. Tenzo says Sunday sales were down. It comments ‘Sunday saw a comparatively low minus 2% sales growth on 2019, however this is due to the corresponding Sunday in 2019 (May 26th 2019) being the day before the Spring Bank Holiday. Interestingly, Tenzo says ‘delivery and takeaway accounted for 40% of total sales this week, though this is a drop from the 57% of total sales we were seeing when only outdoor was open.’ • Langton comment: See premium email. A word on walk-ins: • Booking a table to sit and have a drink lacks the spontaneity often associated with a visit to the pub. Walk-ins are more the ticket but, in these strange times, some operators are pushing pre-sold space. Are they missing a trick? • Langton comment: See premium email. Delivery:
• CGA’s latest Hospitality at Home Tracker reports that April’s delivery and takeaway sales are up fourfold on pre-Covid levels. The tracker says that ‘combined delivery and takeaway sales were 345% higher than in April 2019, when the sector was fully open for eating out. Sales grew by 11% from March 2021, despite the reopening of restaurants, pubs and bars for outside service in England from mid-April. Month-on-month growth in takeaway sales was notably higher than in deliveries.’ CGA says ‘the figures from the Tracker suggest that deliveries, takeaways and at-home meal kits, which have all soared in popularity during the lockdowns of the last 14 months, are likely to remain a major part of consumers’ habits well beyond the full reopening of hospitality.’ It says ‘surging delivery and takeaway sales have been a major side-effect of COVID-19 lockdowns and a lifeline for many operators in • Langton comment: See premium email. • Meanwhile in the US, Restaurant Dive comments on the growth of Loco Co-op which, as its name suggests, is a co-operative delivery vehicle set up and owned by a number of restaurant companies. The business is not huge, it operates in only a handful of cities, but the idea that restaurants should keep as much of the value chain for themselves is perhaps an appealing one. The company is expanding via the franchise model and says ‘we go into these communities, we help organize a true cooperative amongst restaurant owners in the community, and then we provide them with the training to run their own delivery service.’ Subscription services: • This market has grown during lockdown. Whether it be chilled pizza dough or cocktail mixes with instructions, demand has been elevated. Barclaycard reports that spending on digital and subscription services increased by 39.4% in 2020.’ This includes the obvious (Netflix, Spotify etc) but also food products such as those mentioned above. Pragma Consulting says ‘businesses operating within the food and drink industry have witnessed a sharp rise in the number of users signing up to a subscription services. 37% of all subscribers now subscribe to some sort of food service.’ It cites Pret A Manger’s £20 a month offer (up to five drinks a day) along with recipe boxes and meal kits from restaurants during lockdown. Company and other news: • Shaftesbury has reported H1 numbers saying it is seeing ‘encouraging increase in demand for space and lettings.’ It says ‘footfall and spending [are] now starting to return.’ The group says it is ‘well-positioned for gradual recovery and sustainable growth.’ Langton comment: See premium email. • Diageo has pledged £4.5m ‘to provide infrastructure and equipment to support India’s COVID-19 response. It says ‘through this initiative, we will help Indian Government Hospitals in 21 districts to set up Pressure Swing Adsorption (PSA) Oxygen Plants to create long-term oxygen capacity’ and adds ‘at a time when the country is facing an unprecedented humanitarian crisis, we want to support the Government’s efforts and stand by the citizens of India.’ • Punch has ‘teamed up with Big Smoke to invest and launch a collection of craft beer and food pubs across the South East of England.’ • Loch Fyne is reported to have received approval for its CVA. Propel reports owner Greene King as saying ‘Loch Fyne has been severely impacted by the Covid-19 pandemic and the resulting social restrictions. Following advice from an insolvency practitioner, a CVA was proposed to creditors, which has now been approved and will enable us to hand back to landlords a number of sites that are already closed and no longer needed within the Greene King estate.’ • Wine delivery platform Drop Wine has launched a franchise scheme that it says will enable it to undertake a nationwide rollout • The South African wine harvest this year is very good down to cool temperatures, plenty of rain and a late harvest. • Only A Pavement Away and chef Tom Aikens, are calling on businesses to sponsor this year’s Cook and Dine. Now in its second year, Cook & Dine aims to ‘bring everyone who works in the hospitality industry together, no matter their background, experience or seniority and raise funds to help support people facing homelessness find and forge new careers in hospitality.’ HOTELS & LEISURE TRAVEL: • Spain. Holidays are not illegal but are being discouraged. Spain is open to Brits but UK advice is not to travel. Business minister Anne-Marie Trevelyan told Sky News ‘the Prime Minister has been clear that, for now, amber means ‘please don’t go unless there is an urgent family reason and so on’ because we are still trying to slowly move through our road map to being able to open up on June 21 and we want to do that in a steady and careful way.’ • Accor has increased the size of its UK ibis hotel network by around a third after the opening of nine sites with AGO Hotels. • STR reports that airfares and hotel rates are showing signs of moving higher in the US. It says domestic fares are up 9% since April 1 and international flights are up 17%. It reports ‘fares and hotel rates are still largely below 2019 levels because business and most international travel is largely absent.’ It says ‘that will keep a lid on prices going forward.’ • Destination Analyst in the US reports that it has seen ‘positive movement towards recovery’ in the US travel market but it cautions ‘the travel experience is not yet near normal.’ OTHER LEISURE: • Snap has paid $500m to buy Wave Optics, which supplies parts for AR glasses. FINANCE & MARKETS: • The Nationwide has reported that the surge in house prices that has accompanied Covid could prevent a generation of younger people from ever owning their own home. • The UK (and indeed global) unemployment signals are remarkably benign. Langton comment: See premium email. RETAIL WITH NICK BUBB: • Today’s News: The much-rumoured IPO of the Online furniture business Made.com has been confirmed today and the press is likely to have fun mocking the company’s view in its intention to float announcement that it is “the leading digitally native lifestyle brand in home” (!). Given the expected valuation of over £1bn, it is interesting to note that net sales were only £247m in calendar 2020, but the business is growing quickly and aims to have gross sales of over £1.2bn by the end of 2025. The Mothercare pre-close update for y/e March flags that the group now anticipates reporting a small EBITDA profit for the financial year, against previous guidance of a small loss, and sets out a medium-term target of £15m operating profit from its new, asset-light franchise model. • This Week’s News: The latest monthly Kantar grocery figures come out at 8am today. Tomorrow brings the much-awaited M&S finals and the British Land finals, whilst we get the Pets at Home finals on Thursday. TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 25 May 21 Restaurant Group AGM • 25 May 21 Shaftesbury H1 numbers • 26 May 21 C&C FY numbers • 26 May 21 Playtech AGM • 3 Jun 21 New River full year numbers • 8 Jun 21 DP Eurasia AGM • Est 13 Jun 21 Barclaycard Consumer Spending report • 15 Jun 21 Vianet full year numbers • 22 Jun 21 Coca Cola HBC AGM • 24 Jun 21 Bank of England MPC meeting • 13 Jul 21 Pepsi Q2 numbers • 23 Jul 21 Premier Foods Q1 update • 27 Jul 21 Campari H1 numbers • 27 Jul 21 Games Workshop FY 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 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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