Traffic, staffing, Revolution, C&C, coffee, Playtech, Gym Group etc.:

A DAY IN THE LIFE:

We’re promised better weather shortly – and it’s reportedly good in the south already – but, yesterday, the sky darkened at regular intervals here in Yorkshire and it absolutely threw it down.

It was a balmy nine degrees again, the rain was bouncing a foot off the car’s roof, was falling from the trees in drops the size of golf balls and was lashing the existing puddles on the grass such that they coalesced into what you could easily mistake for, well, a large lake.

Still, hope lives on. Jam tomorrow but, for the moment, let’s move on to the news:

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PUBS & RESTAURANTS:

Current trading:

• Wireless Social has updated on traffic for the first week of indoor trading (to 23 May) saying that ‘nationwide hospitality footfall recovered to 39% of pre-covid footfall.’ It says ‘London footfall has recovered most compared to other major cities’ and adds that Glasgow is only city that it measures to experience a drop in traffic as hospitality remained closed last week in Scotland. Wireless Social comments that lunchtimes had recovered more fully than evening sessions. It says ‘over the past week, nationwide hospitality footfall recovered by 39% of levels seen in February 2020 pre-pandemic’ and adds ‘the data demonstrates consumers’ enthusiasm to return to the on-trade, with footfall remaining consistent each day throughout the week.’

• Langton comment: See premium email.

• Hoping for a bumper 21 June. The proposed dropping of social distancing and the move to allow people to order and drink at the bar should boost trade. Capacity (via no distancing) will be increased overnight and vertical drinking should help volumes (and spontaneity etc).

• Langton comment: See premium email.

Staffing:

• We mentioned a few weeks ago that the (non) availability of staff was one of the elephants in the room. The concept is very much in the mainstream now with the Telegraph majoring on the issue yesterday. It said ‘managers in the hospitality sector have found themselves struck by a sudden lack of chefs, waiters, porters and cleaners at just the wrong time.’ The Telegraph quotes some operators, such as David Page at Franco Manca, as saying that keeping the majority of units open for takeaways and deliveries throughout the pandemic has helped them to secure staff. Tim Martin, the chairman of Wetherspoons who argued at length in favour of Brexit, is quoted as saying ‘there seems to be a shortage of labour, which I imagine is only short term, but it doesn’t make any sense.’ Deloitte says ‘in the last 20 years, employers have got used to operating in a labour market where there is a ready
supply of overseas workers, and that has changed as a result of Brexit.’

• Langton comment: See premium email.

• Bizimply has reported that sourcing employees is now ‘the biggest challenge as hospitality reopens’. It says ‘employees, rather than customers, are the biggest challenge facing hospitality businesses as the sector reopens. The majority of operators have experienced some team members refusing to return to work’ and adds that ‘half of employers, 50%, say they lack enough trained or experienced staff to fully reopen.’ Labour intensive Covid-19 safety measures such as table-only service and social distancing will exacerbate the problem say 90% of respondents.

• Langton comment: See premium email.

• New York City restaurant entrepreneur Danny Meyer’s growth fund has made an investment of $21.5 million in a labour management platform 7shifts. Meyer says ‘the restaurant and hospitality industry is about to experience one of the biggest periods of growth and hiring we’ve ever seen, and having the right technology in place to manage this process will be a crucial component to succeed.’

Working from home:

• The Guardian reports that ‘workers at accountancy firm EY will be expected to work from home for at least two days a week, even after coronavirus restrictions lift.’ The company has told its 17,000 staff that it will move to a “hybrid working model”.

• Langton comment: See premium email.

CVAs and restructuring:

• With CVAs and the like in mind, Company Rescue quotes insolvency and restructuring trade body R3 as saying that restructuring corporate liabilities ‘rescued 7,200 businesses and saved 297,000 jobs’ in 2019. It says 39% of businesses advised ‘remained in operation after the conclusion of the insolvency procedure used.’ Food services and accommodation were overrepresented across the industries – and this will have been exacerbated in 2020 as a result of Covid-19. R3 says that one of the main reasons for corporate collapse was management failure and another was ‘financial issues’.

Company and other news:

• Sky reports that Luke Johnson is to make a second attempt to sell Risk Capital’s Bread Holdings, which owns Gail’s. It says Nomura is investigating options and quotes a price of perhaps £250m. Gail’s has 68 sites. Sky says Mr Johnson’s last café chain, Patisserie Valerie, collapsed due to alleged false accounting issues. The liquidator is suing auditor, Grant Thornton, which is in turn alleging that the management itself rather than its auditors had a duty to detect fraud.

• Langton comment: See premium email.

• Revolution Bars Group yesterday reported that it was undertaking a ‘firm placing and placing and open offer to raise £21.0 million.’ The company said that it would ‘ensure the Group is well-positioned to grow the business once its bars fully reopen.’ The fund raise would ‘reduce the Group’s indebtedness, accelerate its existing site refurbishment programme and to take advantage of favourable market conditions for estate expansion.’ The company raised £6 million via an Open Offer made in June 2020.

• Langton comment: See premium email.

• C&C has reported full year results for the year to 28 Feb saying that revenue fell by 56% to €737m despite net revenue growth of 14.2% in the off-trade. The company reports an operating loss of €59.6m against a profit in the prior year of €118.6m. the company is also announcing a rights issue to raise gross proceeds of approximately £151 million.

• Langton comment: See premium email.

• Speaking in the US, KFC has said that it has a long-term goal of 4% annual unit growth, with the potential to triple in size.

• Restaurant Dive has said that Canadian ghost kitchen provider, Just Kitchen, is to expand on the West Coast of the US. This could, over time, become a crowded space.

• Travel restrictions are being advised (they are not yet law) in some areas impacted by the Indian variant.

• Allegra’s World Coffee Portal report 2021 has reported that the ‘UK’s premium automated coffee market doubled in size over five years.’ The introduction of machines by Costa has been instrumental in driving this. Allegra says ‘the UK premium self-serve coffee segment comprises 14,628 units, more than doubling in size since 2016, with advanced technology delivering benefits across quality, consistency and efficiency for hospitality businesses.’

• Langton comment: Whitbread, when it owned Costa, argued for years that baristas took 18mths or 24mths to train but then also maintained that its machine-made coffee was as good as that prepared by one of the aforementioned baristas. The evolution in the group’s comments coincided with its move into the machine-made market. Allegra makes the good point that ‘with post-Brexit staff shortages proving costly for hospitality businesses, a long-term strategy towards automation could also alleviate recruitment pressures for many hospitality businesses.’

• Allegra says ‘one-third of UK consumers surveyed are open to a fully automated coffee shop experience with no human interaction.’ It adds ‘Costa Express continues to dominate the UK premium self-serve segment’ saying it ‘is by far the largest brand in the UK premium self-serve segment, operating 10,390 units and holding a 71% market share. Supermarket giant, Sainsbury’s, has the UK’s second largest premium vending presence with 810 units, with the Starbucks We Proudly Serve automated concept operating 750 units across the UK.’

HOTELS & LEISURE TRAVEL:

• Booking patterns. Book now, cancel later? Langton comment: See premium email.

• Vice president of the Algarve Tourism Bureau Daniel Alexandre do Adro has told Travel Weekly that The Algarve region is expecting visitor numbers this summer to approach pre-Covid levels. Mr do Adro says ‘we are off to a strong start and the numbers for June could very much be close to the numbers pre-Covid — if not exceeding.’

• Spanish tourism minister Fernando Valdes has told Sky News that Spain expects to be added to the green list at the next government review of traffic light categories. He says ‘Spain is doing a great effort not only in terms of vaccination, we have at least one third of our whole population with at least one dose… but also, we have some holiday destinations which are very loved by British tourists such as the Balearic islands, Costa Blanca or Malaga, with notification rates which are pretty low and by the same notification range of the UK.’

• Cosmos has confirmed it will sell holidays to amber destinations despite government ministers saying Britons should not go on holidays to them.

• TUI, on the other hand, ‘has cancelled the majority of its May and June departures to a handful of amber and red list countries,’ reports TTG. The cancellations do not include Spain, but do include holidays in Mexico, Dominican Republic, Costa Rica, Turkey, Egypt, Cape Verde, Morocco, Tunisia and Bulgaria. They will not be available until 28 June at the earliest. TUI says ‘due to ongoing uncertainty, we have unfortunately had to cancel all holidays to the following Red and Amber destinations.’

• The ONS has reported that there were 23.8 million visits overseas by UK residents in 2020, the lowest figure since 1985. The ONS says ‘these large falls are attributable to the coronavirus pandemic, with travel restrictions and reluctance to travel becoming widespread.’

• Staycation signals. Airbnb boss Brian Chesky has told the BBC that ‘Cornwall is now more popular than London.’ Suggesting that some of these stays may be longer term lifestyle choices, Mr Chesky says ‘everyone is going to live a bit differently because they have more flexibility and are less anchored to the city.’

• PwC has updated its US Hotel 2021 Outlook saying that the vaccination rollout is accelerating recovery. It says ‘destinations reliant on leisure demand are expected to experience increasingly strong performance through the summer; however, as we approach Labor Day and companies’ back-to-office plans evolve, some markets are expected to fall off of summer highs.’

OTHER LEISURE:

• Playtech has reported on trading for the period from 1 January to 30 April 2021 saying it ‘has continued to make progress against its strategic and operational objectives.’ CEO Mor Weizer says ‘I am delighted by the strong performance Playtech has delivered so far in 2021, despite the ongoing challenges posed by the pandemic.’ The company has also announced the sale of its Finalto business. Mr Weizer says this ‘delivers on our strategy to simplify the Company. Our technology and product offering is unrivalled and we have a clear growth strategy to expand the geographic reach of our Core B2B business.’ The CEO concludes ‘we believe that due to the hard work and dedication of our employees, Playtech will exit the pandemic stronger than ever. Looking ahead, we are confident that the simplified Group and the exciting growth opportunities ahead will deliver significant value to
shareholders.’

• The Gym Group has updated on reopening saying that ‘the Company re-opened its gyms in England on 12 April, followed by gyms in Scotland on 26 April and Wales on 3 May. The entire estate is now open and trading.’ It says ‘trading since re-opening has outperformed the Company’s expectations, reflecting strong demand for the return to gyms.’ The company adds ‘our expectation is that over the next three months we will trade more in line with seasonal norms. The summer months are historically quieter times for gyms and as a result we tend to see limited net gains in overall membership levels during this period.’ CEO Richard Darwin says ‘our members are delighted to be working out in the gym once more with visits per member and new joiner sign-up rates at record levels. With membership levels growing strongly, we are building our pipeline of new gyms to take advantage of what we see as a
unique opportunity to extend affordable fitness to even more locations across the UK.’

FINANCE & MARKETS:

• Government borrowing came in at £31.7bn in April. This was lower than April last year but was the second highest April on record. The ONS is estimating 2020/21 borrowings will come in at £300.3bn, down from an earlier estimate of £303.1bn.

• The ICAEW says ‘the focus over the next few months is likely to be on the next Spending Review, which will decide on future public spending and investment with the long-awaited social care funding strategy now anticipated to be announced later this year. However, the need to address the long-term unsustainability of the public finances shouldn’t be forgotten.’

• Trade between the UK and Europe fell by 20.3% in Q1. The bulk of the drop came in the first month. Trade with the rest of the world fell 0.4%.

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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

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