Whitbread, Lounger’s, inflation, WFH, delivery & other:

A DAY IN THE LIFE:

A bit rushed at the moment but, last night, as I was catching up on a couple of BBC documentaries, prof Brian Cox reminded me that I was an insignificant bunch of carbon and hydrogen atoms sitting on a tiny rock, one of many billions and that, in the scale of things, I meant absolutely nothing.

I must write to thank him for that. On to the news.

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WHITBREAD – AGM & Q1 TRADING UPDATE:

Whitbread has updated on Q1 trading and our comments thereon are set out below.

Headline numbers:

• Whitbread has updated saying that it is seeing ‘continued market outperformance in the UK [with] strong leisure demand post 17 May.’

• It says that, versus 2019, accommodation revenue is down 60.5%, food spend is down 85.9% and total revenues are down by 69.8%.

• The LfL numbers, which are a little worse (reflecting the fact that the group now has more units open), are down 62.2% in accommodation and down 86.2% in food to give a total LfL down 71.0%.

• Further comment: See premium email.

PUBS & RESTAURANTS:

Commercial eviction moratorium extended:

• The government has confirmed the Sky News story that the moratorium on the eviction of commercial lessees will be extended to 25 March 2022 (the day on which Q2’s rent is due next year). The ban was due to end on 30 June, only two weeks hence. Retail and hospitality debt accrued could be as high as £5bn, with half of that due from hospitality tenants. Treasury Secretary Stephen Barclay said ‘existing measures will remain in place, including extending the current moratorium to protect commercial tenants from eviction.’ Barclay also announced plans for a binding arbitration scheme to resolve disputes between landlords and commercial tenants. The scheme should be in place by the time that the eviction ban is lifted.

• UKHospitality says that it ‘has unreservedly welcomed the Government announcement of new rules to ringfence Covid-19 commercial rent arrears and the extension of measures to protect commercial tenants from evictions to March next year.’ It says ‘these measures are wholly welcome and will banish a grim shadow that has hung menacingly over hospitality since the Covid crisis began 15 months ago.’ It says ‘thankfully, many landlords and tenants have managed to come to an amicable arrangement over rent arrears, but many could not and the Government’s announcement brings in an equitable solution where there is a sharing of the pain.’

• Further comment: See premium email.

Food inflation:

• CGA reports that foodservice prices rose 5% in April as inflationary pressures began to mount. It says the latest CGA Prestige Foodservice Price Index highlights the global challenges being faced by operators in dealing with cost increases and it ‘forecasts more increases.’

• Further comment: See premium email.

Working from home:

• Representatives from rail operators, Network Rail and unions have formed a group called the ‘Rail Industry Recovery Group’ to cut £2bn of costs across the network. The group will aim to reduce the £800m-a-month subsidy currently paid by taxpayers.

• In a further sign that there could be too much office and retail and transport capacity out there, Oxford Circus plans to develop into two pedestrian-friendly piazzas as part of plans unveiled by Westminster City Council and the Crown Estate, will begin as early as this summer.

• Further comment: See premium email.

Delivery:

• CGA has reported that ‘May’s delivery and takeaway sales at Britain’s leading restaurant and pub groups were 273% higher than in May 2019.’ Further comment: See premium email.

Company & other news:

• Loungers has updated on trading saying that it finished its year (to 18 April) with 168 sites. It adds, re recent trading, that ‘in the period following the initial relaxation of Covid-19 related restrictions on 12 April 2021, Loungers opened 88 sites to trade outdoors only. Whilst the weather made this challenging at times, outdoors trading allowed for a phased and controlled re-opening of the estate.’ Moving on to indoor trading, Loungers reopened all of its sites on 17 May and says ‘like for like sales over the four-week period from 17 May through to 13 June 2021 were +26.6%, using the period 20 May to 16 June 2019 as the comparator.

• Further comment: See premium email.

• CGA Research commissioned by Access Hospitality shows that 87% of consumers with serious food allergies or intolerances will feel more confident in trusting the content of pre-packaged food out of home once Natasha’s Law is in place.

• The US will suspend tariffs on $7.5bn worth of EU goods for 5 years after coming to an agreement with the EU.

• In the US, alcohol consumption increased by 2% according to data from IWSR Drinks Market Analysis. The rise in consumption in the US last year was driven by at-home drinking fuelled by the pandemic.

• Hostmore Plc will become Electra Private Equity’s new parent company for its hospitality brands including TGI Fridays, and 63rd+1st. Robert B. Cook will be appointed as CEO with Alan Clark as CFO.

• Black Box in the US reports that restaurants there posted their third consecutive month of LfL growth in May. These numbers are compared with 2019 and the analyst says that sales are now better than they were before the pandemic. Further comment: Footfall is still under pressure but spend per head is up. National Restaurant News in the US says ‘the optimism in the industry is shared by restaurants guests. A larger percentage of restaurant experiences in May were rated more positively than two years ago.’ NRN singles out pizza as a strongly performing product. It says burgers and chicken also remained popular. No surprises there.

• Politico reports that Perspex screens have been found to serve little purpose in preventing the spread of viruses. It says ‘while social distancing laws are going to be lifted, ministers are considering bringing in new rules for businesses to help keep workplaces safe, including the possibility of requiring minimum standards of ventilation.’

• African restaurant chain PAPA L’s KITCHEN and coffee house is to take a site from The Crown Estate in its St James’s portfolio.

• In the US, Diageo was named as the NFL’s first Official Spirits Sponsor. Ed Pilkington, Chief Marketing & Innovation Officer, Diageo North America said ‘We are energized about bringing new and exciting programs and experiences to the NFL’s passionate adult fan base’.

• Nespresso has started a €146.8m expansion of its production centre in Romont, Switzerland. A second production hall will help double the production capacity, with 10 new lines dedicated to Nespresso Vertuo and Professional coffee ranges.  

INFLATION – BEAST FROM THE PAST OR BUSTED FLUSH?

• See Finance & Markets below for the raw data. The CPI rose to 2.1% in May from 1.5% in April. The ONS reports ‘this month’s rise was led by fuel prices, which fell this time last year but have jumped this year, thanks to rising crude prices. Clothing prices also added upward pressure as the amount of discounting fell in May.’ Fuel prices are pervasive, as they impact virtually everything. The ONS said motor fuels saw a 17.9% price rise year on year. Prestige and CGA comment on food prices in Pubs & Restaurants below. There is some disconnect with the ONS data here as the latter says that the increase in fuel costs was partly offset by year on year drops in food and drink prices.

• Further comment: See premium email.

HOTELS & LEISURE TRAVEL:

• Labour leader Keir Starmer has said that the traffic light system is not fit for purpose. He said it “doesn’t work and won’t stop other variants coming in”. Starmer told the House of Commons ‘after so many mistakes and with the stakes so high, why doesn’t the prime minister do what Labour is calling for: drop the traffic light system, get rid of the amber list, secure the borders and do everything possible to save the British summer?’

• The EU is expanding its white list by adding eight countries including the US. The UK is not yet on the list. “There are serious concerns about Delta and surge of numbers,” an EU diplomat told the Guardian.

• The travel industry is calling on the government to ‘save the summer’. HMG is said to be considering relaxing restrictions on international travel travellers who have had both coronavirus vaccines per Sky.

• Ryanair and Manchester Airports Group have joined together to mount a legal challenge against the government over its travel traffic light system.

• Carnival-owned Cunard has announced that it is resuming operations from 19 July, 2021 ‘as Queen Elizabeth welcomes guests on board for a series of UK voyages from Southampton and beginning 13 October, 2021 sailing internationally with new voyages including to the Iberian coast and the Canary Islands.  Queen Elizabeth will then leave the UK in mid-February to resume her previously scheduled season in Japan from 13 April, 2022.’  

• Research for Travel Weekly suggests that barely one in 10 UK consumers are keen to take a foreign holiday as soon as possible or reassured they will be able to travel abroad before the end of the year.  

OTHER LEISURE:

• The Royal Society for Public Health (RSPH) has cited a nationwide poll that suggests that most of the public support a total ban on gambling adverts, while three-quarters think restrictions should be tighter than they are now.

• App Annie reports that users worldwide downloaded 30% more games in the first quarter of 2021 than in the fourth quarter of 2019, and spent $1.7bn per week in mobile games in Q1 2021, up 40% on pre-pandemic levels.

FINANCE & MARKETS:

• The ONS reported yesterday that UK inflation jumped to 2.1% in the year to May from 1.5% in April. Analysts had been looking for around 1.8%. This leaves inflation at its highest level since the pandemic began. The NIESR says this is the ‘highest level since July 2019.’ It says ‘our measure of underlying inflation, which excludes extreme price movements, displayed a smaller rise to 1.2 per cent in May from 0.9 per cent in April, suggesting that consumer prices are rebounding after the lengthy winter lockdown.’

• Further comment: See premium email.

• House prices in the UK fell 1.9 per cent in April reports the Land Registry.

• Research by Santander suggests that around half of first-time buyers last year delayed plans to buy a home. Younger consumers were hit harder financially by the pandemic than were some other groups of house-buyers.

• Sterling mixed at $1.3998 and €1.1663. Oil lower at $74.15. UK 10yr gilt yield down 1bp at 0.75%. World markets heading down yesterday and London set to open some 34pts lower.

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TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 8 Jun 21 DP Eurasia AGM

• 9 Jun 21 SSP H1 numbers

• Est 9 Jun 21 Barclaycard Consumer Spending report

• 10 Jun 21 Compoir FY numbers

• 15 Jun 21 Vianet full year numbers

• 15 Jun 21 On the Beach H1 numbers

• 17 Jun 21 Whitbread AGM & Q1 trading update

• 22 Jun 21 Coca Cola HBC AGM

• 24 Jun 21 Bank of England MPC meeting

• 30 Jun 21 Constellation Brands Q1

• 8 Jul 21 Fuller’s FY numbers

• 13 Jul 21 Pepsi Q2 numbers

• 21 Jul 21 Loungers FY numbers

• 23 Jul 21 Premier Foods AGM & 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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