Langton Capital – 2021-07-06 – PREMIUM – Marston’s, 19 July proposals, staffing, June PMI, inbound travel etc.:
Marston’s, 19 July proposals, staffing, June PMI, inbound travel etc.:
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A DAY IN THE LIFE:
Sorting through the bumph at the bottom of a drawer over the weekend, I came across some paperclips that, if my reckoning is right, we had used when working in Switzerland around the Millennium. This prompted the question, do paperclips ever really wear out and, if they don’t, then haven’t we got enough already?
This is a) trivial but b) probably quite important to paperclip magnates who, one would imagine, have to dream up more and interesting ways of persuading people to buy paperclips that they don’t really need, to replace perfectly good, decades-old paperclips that haven’t worn out.
We left it at that as the football was about to come on.
Terrible weather out there, better tomorrow. Pubs in The City empty yesterday but it’ll be a different story tomorrow. There’s not a ticket to be had for love nor money. On to the news:
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PUBS & RESTAURANTS:
19 July easing of restrictions:
• PM Boris Johnson last night updated on the planned lifting of further restrictions on 19 July saying that a final decision on whether to proceed would be taken on 12 July.
• This is all subject to change but the proposal is that the restrictions will be lifted together rather than piecemeal. The main changes being proposed at this stage are that:
o Face coverings will be optional. Venues may choose to require them or individuals may choose to wear them. See response of airlines below.
o All businesses that remain closed, including ‘intentionally crowded’ venues such as nightclubs, will be allowed to reopen with no limits on capacity. The one-metre-plus rule will be lifted.
o Mass events such as gigs and festivals will restart.
o Bar service will be allowed in pubs.
o There will be no requirement to scan QR codes when entering hospitality venues. Track & Trace will be reduced as a result.
o Re staffing. People (including bar staff etc) will still be required to self-isolate if they have tested positive or have come into contact with an infected person
o The requirement to work from home if possible will be dropped.
o Other. Care home visitation limits will be dropped. There will be an update on quarantine-free travel and school isolation later in the week
• Trade reaction: The BBPA says that ‘2,000 more pubs would reopen with [the] lifting of remaining restrictions’. The trade body has ‘welcomed the announcement that restrictions on pubs in England, including one metre plus social distancing and table service only, would be lifted on July 19th if the government goes ahead with its roadmap.’ CEO Emma McClarkin says ‘the lifting of all remaining restrictions on pubs in England, if the Government sticks to its roadmap, is hugely welcome for our sector.’ She says ‘after nearly 18 months of forced closure or operating under severe restrictions – which crippled the viability of pubs – July 19th should mark the beginning of the recovery for our sector in England.’
• The BBPA asks for more help saying ‘having been one of the worst hit sectors by lockdown, our pubs and brewers now need the Government to invest in them by reforming VAT, beer duty and business rates to reduce the unfair tax burden they face and aid their recovery.’
• UKH has also welcomed the comments saying ‘the Prime Minister’s announcement marks a major milestone in how England will come to live with Covid and will be celebrated by hospitality business owners and their staff across the country. For the vast majority of hospitality businesses, 19th July – if confirmed next week – will be the first time in 16 months that they have been able to realistically look to break even and move towards profitability.’ CEO Kate Nicholls says this ‘comes as welcome news that hospitality venues will soon be able to cast off the restrictions that have heavily constrained them commercially. However, the sector has been at the forefront of developing and implementing health and safety measures and initiatives throughout the pandemic and will continue to do so, in order to trade back to prosperity and help drive the national recovery.’ Ms Nicholls cautions ‘it
• The Society of Independent Brewers’ CEO, James Calder, says ‘brewers and publicans across England will this evening breathe a small sigh of relief as PM Boris Johnson confirmed the remaining Covid hospitality restrictions will be lifted as part of the planned 19th July easing of Covid rules across England, but that a final go-ahead would be given on the 12th July.’ SIBA says it ‘would also like to see the First Minsters in Scotland, Wales and Northern Ireland to follow England’s lead and confirm plans for the removal of hospitality restrictions, allowing pubs, bars and brewery taprooms to catch the end of the vital summer trade and begin to recoup the losses made over the last eighteen months.’
• Per Morning Advertiser, Streetbees data shows 44% of respondents said they were aware of local venues having to alter trading hours or service due to a lack of staff. Younger pub goers were the most likely to notice, with 53% of 18 to 25-year-olds noticing a change in service.
• The BBPA has said that pubs being forced to close after staff have been asked to self-isolate is an increasing issue for its members. More than half of respondents to the Streetbees survey said they have seen a pub, bar or restaurant in their area close permanently as a result of the pandemic.
Working from home:
• You can see who’s hurting. Some suburban pubs will be benefiting from the fact that a large number of workers are still working from home. Elsewhere, the going is tougher. As reported yesterday, some 50 companies have written to the PM asking him to urge people to return to work. Signatories include D&D London (which has central London restaurants) and Compass Group (which operates workplace catering venues as well as some restaurant venues in airports and other travel hubs. The letter says ‘for many months now, employers and employees have dealt with often complex – sometimes mixed – messages tending towards caution where the advice has not been clear cut.’ Property company Land Securities also signs the letter. The company may well be right but it has a clear vested interest in getting workers back into the workplace.
• The Caterer reports that ‘only 27% of hospitality staff have returned to work after furlough’. It says that, even in a business renowned for its relatively high staff churn rates, this means ‘a staffing crisis is a given.’ The Caterer quotes CGA as saying that ‘labour shortages are the number one concern for leaders, with 61% referencing it as an issue (this rises to 91% for independent restaurant chains).’
• The UK Markit Services PMI for June was released yesterday & concluded ‘UK service providers reported another steep increase in business activity during June, with the speed of recovery only marginally slower than the peak seen in May. The rapid turnaround in business and consumer spending since the roll-back of pandemic restrictions led to the fastest rate of job creation for seven years.’
• Markit says ‘survey respondents widely noted that capacity constraints and staff shortages had resulted in higher volumes of unfinished business. The latest rise in backlogs of work was the steepest since the survey began in July 1996. Imbalanced demand and supply also contributed to survey-record rates of input cost and prices charged inflation during June.’
• Further comment: The survey addresses two of the elephants in the room that we have mentioned previously, staff shortages and inflation. Hospitality and travel get one or two specific mentions.
• The services number was 62.4 in June, down slightly from the 62.9 recorded in May. This was the second-highest reading since October 2013 and above the earlier ‘flash’ figure of 61.7 in June. There was a sharp rise in new orders and inflation, as mentioned above, is seen as a concern. Markit concludes ‘the service sector recovery remained in full swing during June as looser pandemic restrictions released pent up demand for business and consumer services. Sales growth eased slightly from May’s recent peak, but capacity constraints and staff shortages meant that many service providers struggled to keep up with new orders.’ It says ‘difficulties filling staff vacancies were reported by survey respondents in all parts of the service economy during June, with hospitality and leisure experiencing the greatest squeeze.’
• Markit says ‘staff shortages and delays among suppliers were by far the most commonly cited constraints on growth in June. International travel restrictions, especially uncertainty about quarantine polices at home and abroad, were also a prominent source of anxiety. These disruptions to inbound and outbound travel contributed to another slight dip in export sales, which stood in sharp contrast to resurgent domestic demand. “The latest survey data highlighted survey-record rates of input cost and prices charged inflation across the service sector, reflecting higher commodity prices, transport shortages and staff wages. Imbalanced supply and demand was the main driver, while the roll-back of pandemic discounting by some service providers amplified the latest round of price hikes.’
Marston’s – CFO appointment:
• Marston’s has announced the appointment of Hayleigh Lupino as Chief Financial Officer of the company with effect from 3 October 2021. The company says that ‘Hayleigh’s appointment follows a full and proper independent selection process, conducted by the Board, which also reviewed potential external candidates for the role.’ The vacancy has arisen because current CFO, Andrew Andrea, is to succeed Ralph Findlay as CEO of the group at the end of the current financial year on 2 October 2021.
• MARS comments ‘an experienced finance professional, Hayleigh is currently Marston’s Director of Group Finance and has over 18 years’ experience within Marston’s.’ Ms Lupino also serves on the Carlsberg Marston’s Brewing Company Board as a Non-executive Director. The company says that the CFO elect ‘has both helped to develop the strategy [the creation of the brewing JV with Carlsberg], and led the integration plans, which saw a transformation of the beer business over the last 10 years. This included the acquisition of Thwaites beer business and Charles Wells Beer Business, together with the expansion of the distribution business onto a wider national platform.’
• MARS chairman, William Rucker, says ‘I am delighted to announce Hayleigh’s appointment and welcome her to the Marston’s Board. Marston’s is a people business and Hayleigh has unparalleled knowledge, understanding and experience of Marston’s business, culture and values which, together with her clear financial prowess, will be a great asset to the senior leadership team. She has a proven track record of delivery and is highly regarded within Marston’s which will stand her in good stead in her future role. I, together with my fellow directors, look forward to working with her closely in future.’
Company & other news:
• Pizza Punks, an ‘anarchic’ pizza chain, announces a new Leeds site as its fourth restaurant.
• Christie & Co is going out searching for new venues on behalf of client, Rileys/ the sports bar chain is looking for ‘existing sports bars / cue sports businesses, industrial units, new developments, former car show rooms, retail stores and office space [or] shared units with licensed, leisure and sports operators.’ The company would like 8-10k square feet with a minimum of 4k square feet on the ground floor. Rileys is looking for leasehold sites ‘with a minimum renewable lease term of 15 years.’
• Kitchen equipment manufacturer Welbilt has agreed to a purchase by Ali Group at $24.00 per share in cash. A press release says ‘Ali Group has obtained fully underwritten, binding commitment letters for debt financing from Goldman Sachs Int’l. and Mediobanca.’
• Ready Burger has closed its crowdfunding campaign after raising nearly £2m to fund its plans for ‘rapid’ growth across the UK. The company bills itself as the ‘first value-driven, fully plant-based quick service restaurant in the UK’ and recently opened its debut venue in London’s Crouch End.
• Bubble CiTea, a Taiwanese bubble tea company, has announced that it is opening a new London branch this weekend at the Mall Walthamstow.
• The Drinks Trust partners with the hospitality industry’s main trade associations to encourage the public to support the sector by visiting pubs on the National Hospitality Day on 18 September.
• Long Live the Local is teaming up with publican and model Jodie Kidd to launch a new campaign to champion the important social and economic role that pubs play at the heart of communities in the UK.
HOTELS & LEISURE TRAVEL:
19 July proposed changes:
• The travel trade has cautiously welcomed comments by the PM but notes that a further statement will be made later this week and a final decision will not be made until 12 July. Ministers are being urged to detail plans “as soon as possible.” PM Boris Johnson has confirmed that transport secretary Grant Shapps will update “later this week.” The PM says the UK will continue to “maintain our tough border controls.”
• Airlines including Ryanair, easyJet and Jet2 have said that passengers will still be required to wear face masks after 19 July. A spokesperson for London mayor Sadiq Khan has said the London mayor and the head of Transport for London wanted central government to “retain the requirement for face coverings on public transport”.
• Nigel Huddleston, the minister for tourism, said ‘I hope to see some international travel come back before the end of the summer…[But] things are fluid – that is the reality. We’re still in the middle of a global pandemic and there is no such thing as risk-free international travel.’
• Further comment: There is sometimes little attempt to differentiate between inbound tourism and outbound tourism. The latter will include air-inclusive tour operations and cruise businesses, whilst the former include most of the UK hospitality industry right through from the accommodation provider to the pubs, bars, restaurants and visitor attractions in which the holidaymaker spends his or her money.
Other travel news:
• Real Business Rescue’s Business Distress Index shows a total of 2,555 tour operators and travel agencies were in ‘significant financial distress’ in the first quarter of this year. The Index showed that 877 tour operating companies and 1,678 travel agencies, reservation services and related firms of all sizes were in financial distress, up 14% on Q4 last year and 44% year on year.
• The number of start-up travel and tourism firms (created after 2017) in significant financial distress had increased by 13% in Q1 of 2021, with 1,109 of these businesses in distress compared to 845 the year prior.
• Per TTG, Sajid Javid is being asked ‘to act decisively to save jobs’ in a letter sent by fourteen travel industry leaders, including Airlines UK, Abta, UKinbound and the GMB union. The letter said ‘We are encouraged that the government has confirmed an intention to relax rules for fully vaccinated people travelling from amber destinations, and to remove statements discouraging travelling to these places. However, these changes must be implemented quickly – at the latest alongside the lifting of domestic restrictions in July – if they are to make a meaningful difference to the UK travel industry.’
• Saga Holidays is knocking off an additional £150 off four-week stays and £75 on three-week holidays as travel starts to return.
• 40-strong a&o Hostels has opened its first hostel in the UK on 1 July, located in Edinburgh. CEO and founder Oliver Winter said ‘we now have properties in 24 cities and nine European countries and have ambitious expansion plans and are looking at multiple locations across the UK and Ireland.’
• The Algarve, which saw a surge in visitors from the UK before Portugal was put on the Amber list, is reported to have seen a spike in Covid. The WHO says it has seen an increase of 74% to 345 cases per 100,000 in the last week.
• A Covid-19 based travel ban on people from the UK travelling to Germany is to be lifted tomorrow.
• Gaming giant Modern Times Group (MTG) acquires Indian startup PlaySimple for at least $360m.
• KwizzBit, a Yorkshire-based interactive trivia business, has raised £250,000 from angel investors to fund further product development and expansion.
FINANCE & MARKETS:
• Services PMI, see Pubs & Restaurants above.
• Estate agent Knight Frank has reported that there were a record number of lettings and sales across the housing market in London last week. It says sales were 53 per cent higher than March, the second highest month on record.
• Sterling up at $1.3879 and €1.1687. Oil price higher at $77.45. UK 10yr gilt yield up 2bps at 0.72%. World markets broadly higher yesterday but London set to open down around 30pts as at 7.15am.
RETAIL WITH NICK BUBB:
• Nick is taking a well-earned break. He’s back on Monday.