Langton Capital – 2021-06-10 – Inflation, 21 June, Euros, labour issues, Drake & Morgan, staycations etc.:
Inflation, 21 June, Euros, labour issues, Drake & Morgan, staycations etc.:
A DAY IN THE LIFE:
There was a traffic jam on London Wall yesterday and I stopped to take a photo.
Cars were sounding their horns at each other, vehicles couldn’t get out of Blomfield Street and bicycles were swerving in and out of the traffic and banging on car rooves, it was just like the good old days.
Sadly, though the tumbleweed didn’t make an appearance until gone 6pm, the busy-feel didn’t last and, by the evening, it was back to ‘normal’.
A mixture of Covid, a desire not to commute and the sticky, thirty-degree heat keeping people off the streets, no doubt but, for the pub, bar, café and sandwich shop owners in the area, the precise reasoning may be academic.
Still, if Langton liked a bet, it would say that the heat, Covid and the desire to work from home will disappear slowly and in that order. On to the news:
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• To a computer, inflation is no big deal. You increase input costs and output prices by 2%, 3% or whatever but, in practise, it’s a real problem. See premium email.
LATE BREAKING NEWS – See premium email for detail.
• Changes in Licensing Regulations. UKH pleased but would like more.
• More on staffing issues. Shortages in holiday hotspots.
• Comptoir FY numbers. Revenue was down 62.6% to £12.5m and adjusted EBITDA was £1.4m against £5.3m in the prior year.
• Shapps on traffic lights.
PUBS & RESTAURANTS:
21 June concerns:
• Chancellor Rishi Sunak has indicated he is willing to accept a delay of up to four weeks to the final stage of England’s reopening roadmap. This would push the dropping of all restrictions out to 19 July.
• Langton comment: See premium email.
• The Night Time Industries Association (NTIA) will ‘challenge Government’ if denied opening on 21 June, claiming that any delay will place businesses on a ‘financial cliff edge’.
• Andrew Lloyd Webber has said will re-open his theatres on 21 June, even if he is arrested (and is presumably fined or thrown in prison or both) for doing so. Much as we would like to see restrictions lifted….
• Lloyd Webber told The Telegraph ‘we are going to open, come hell or high water.’ Theatres are allowed to open now but, with restricted capacity, they may not be viable.
Other covid-related issues:
• The BBPA reports that 85% of pub-going football fans believe the current restrictions will negatively impact their experience of watching UEFA Euro 2020. At present, pubs are required to ensure one metre plus social distancing is in place, operate table service only and ensure that face masks are worn other than when sat at a table inside or if outdoors.
• Emma McClarkin, CEO of the BBPA said ‘It is a great shame as we know 91% of pub going football fans missed watching the game at the pub during lockdowns. More and more people are getting the vaccine each day. It’s time for the restrictions on our freedoms to be replaced by the protection of the vaccination’
Staff and labour issues:
• The US Bureau of Labour Stats has said that there were 1.3m open job positions in accommodation and foodservice in the US in April, up from around 1.0m in March. Various US operators have made known their intention to hire thousands and, in some cases, tens of thousands of team members. Just where these bodies are going to come from remains unclear.
• NRN, also in the US, comments on a similar topic saying that one McDonald’s franchisee is offering a free iPhone after six months of employment. Poaching is on the up, loyalty bonuses are being offered and wages are rising.
Company and other news:
• Drake & Morgan has seen their CVA approved which will leave the bar and restaurant group with 19 venues in London, Manchester and Edinburgh with three sites permanently closing. Jillian MacLean, founder and CEO of Drake & Morgan, said ‘The approval of the CVA means we can look forward to strong growth and begin rebuilding the business on a positive financial footing.’
• Ganan Kanagathurai, CEO of Itsu, claims the company plans to add a further 150 sites to its UK estate.
• In the US, a report by Datassential claims that as of June 1, 299,564 U.S. restaurants—132,525 of which are chain restaurants—are open for dine-in.
• The Datassential study showed that 30% believe retail and restaurant workers can stop wearing masks immediately, another 22% said workers could do so in another three months and 21% said masks should stay in play until the end of the year. The percentage that wanted to see masks worn forever was notable, at 19%.
• Punch Pubs & Co is set to support publicans during the Euros, with marketing & strategy director Russell Danks saying ‘It will provide a vital boost for many businesses, and we have really got behind the Euro’s campaign providing our Publicans with fantastic support‘.
• The legal precedent seems to have been set and employees on sick leave are able to go to the pub after Judge Andrea Pitt ruled that an employee was unfairly dismissed after he was seen drinking at a social club while off sick.
• Just Kitchen has announced it is to raise $20 million to help fund its expansion plans into the U.S. The company’s first sites in the US will be in Seattle and in several California cities.
• Livekindly Collective is set to acquire The Dutch Weed Burger, a plant-based meat alternative company that uses seaweed. Livekindly Collective intends to scale internationally in the UK, Nordics, and the US and Canadian markets; as well as enter into Asia.
HOTELS & LEISURE TRAVEL:
• Per The Telegraph, cities are set to miss out on the summer staycations, while seasides and the West Country benefit, with just over a fifth of holidaymakers planning to go to the South West. Wales, Scotland and Yorkshire and Humber are the favoured destinations for more than one-tenth of Britons.
• Ahead of the House of Commons debate on support for the travel, aviation and tourism industries tomorrow, UKinbound has written to more than 90MPs, highlighting the challenges, opportunities and key demands of the sector. The lack of clarity regarding countries on the government’s green list, the frequency and cost of testing and no recognition of fully vaccinated arrivals are all highlighted as ‘fundamental barriers’ within the sector.
Air inclusive holidays & aviation:
• IATA reports that the recovery in global international air travel stalled in April due to continued (and sometimes tightening) border restrictions – but, interestingly, domestic air traffic continued to recover relatively strongly. IATA says domestic demand in April was c26% down on 2019 levels but some 6pps better than the number in March. International travel, on the other hand, was down 87% on 2019 in April and 88% down on 2019 in March. IATA DG Willie Walsh comments ‘the strong recovery in domestic markets tells us that when people are given the freedom to fly, they take advantage. Unfortunately, that freedom still does not exist in most international markets. When it does, I’m confident we’ll see a similar resurgence.’
• Forward Keys has said that international air travel this summer may be only around 23% of its pre-pandemic levels. Outbound bookings from Germany, France and the US are the best of the bunch at 37%, 42% and 24% of 2019 levels respectively. Forward Keys says ‘it is now clear that for most of the world, a summer holiday abroad is a dream; and a staycation is the reality. Travel businesses in general, and airlines in particular, will face more substantial losses, as many countries combat Covid-19 by closing their borders and imposing severe restrictions on flying internationally.’
• Travel Weekly reports that ‘airports alone stand to lose at least another £2.6 billion in revenue in summer 2021.’ This, of course, after a dreadful 2020. The Airport Operators Association has pointed out that the UK’s green list covers only 1.7% of 2019 passenger numbers. TW says that last year, ‘even with the more liberal travel approach in 2020, UK airports lost out on £2.6 billion revenue between April to September.
• Norwegian Cruise Line has said that it believes Britons wish to catch up on lost holidays. The key here will be whether or not the wish was father to the thought. A poll commissioned by the operator suggested the average would-be customer will spend an extra £167.40 per year on international trips as travel resumes.
• The retail investor frenzy in AMC continues as the volatile stock is up nearly 3,000% since the start of the year. Retail investor enthusiasm and memes surround the heavily shorted stock, with its CEO Adam Aron saying ‘Watch out naysayers, AMC is going to play on offense again. Here we come!’
FINANCE & MARKETS:
• The World Bank says that the emergence from the current recession (globally) could be the fastest in more than 80 years. It believes the world economy will grow at 5.6% this year, up on estimates made in January for growth of 4.1%.
• Bank of England economist Andy Haldane has said tax breaks mean that the housing market in Britain is “on fire.”
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• Nick is away today, back tomorrow.
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