Working from home, FUL, JET, labour shortages, Nando’s etc.:

A DAY IN THE LIFE:

It’s a slow news day.

So, musing separately on the fragility of life and the industry of the Dutch in filling in the ocean near to their coastline, it occurred to us that, if you took all the land and plonked it in the sea (to create more ‘land’), you would indeed level things out – but we’d all be under about 8,000 feet of water.

This because we simply live on the bumps.

Not only is the Earth a Goldilocks planet – not too hot and not too cold – and it’s rocky rather than a gas giant, but it’s not a perfect sphere because, if it was, the water would cover it in a perfectly uniform, 8,000 foot thick blanket and we, if we existed in any shape or form, wouldn’t have two legs and two arm and walk on anything remotely solid.

Something to think about the next time you skim a stone into the sea.

Quote of the Day (as we were undertaking research in a London pub charging £6.30 for a pint of pale ale): ‘We don’t take Amex, it’s too expensive’. Not much of it today but 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:

HERE

PUBS & RESTAURANTS:

Demand:

• The FT reports on the working from home phenomenon saying that ‘the pandemic created a tempting opportunity for many urban workers…to move somewhere cheaper.’ The workers in question wouldn’t necessarily be offering to take a pay cut, but that’s what’s being suggested now by a number of employers. Google says that workers in the US choosing to work from home will have their pay determined by their location. If this caught on and spread to the UK, it would impact both the total amount of money in circulation and the places in which it was spent.

• Further comment. See premium email.

• Kantar has reported that retail spending is moving back in the direction of ‘normal’ in that only 20.3% of households ordered groceries online in the four weeks to 8 August, the lowest figure since October and markedly down on the 23.4% who did so in February this year, in the middle of the third lockdown. This matters because the 79.7% of people who didn’t order online were presumably getting out of the house. They would have been more likely to buy a coffee, a sandwich or make an impulse purchase than they would if they had ordered online.

• Further comment. See premium email.

Supply:

• Product – supply. Getting food & drink into pubs & restaurants is proving somewhat problematic. The MA has conducted a ‘snap poll’ that suggests ‘more than three quarters of operators are currently having issues with beer delivery delays’.

• Further comment. See premium email.

• Product – price. Elsewhere, the latest CGA Prestige Foodservice Price Index says that ‘widespread distribution problems’ have coincided with ‘a spike in demand following the return of out-of-home eating and drinking’ such that prices have been squeezed a little higher, with prices up 1.6% in the month of June. The report says ‘June saw particular supply issues in the south of England, after the return of restaurants, pubs, bars and other venues, amplified by warm weather. Problems were compounded by a shortage of labour, particularly HGV drivers, as well as insufficient manufactured stocks and Brexit-related challenges with imported goods.’

• Further comment. See premium email.

• Staff. The ONS has reported that job vacancies in hospitality rose by 163.7% between May and July as restrictions were eased. It says that vacancies in accommodation and food service rose by 73,000 in the three months compared to the prior 3mth period.

• Nando’s is reported to have shut restaurants as lorry driver shortages have hit deliveries. The sites have been closed in London, the North West, Midlands, the South East and South West, and one outlet in Scotland. The company has tweeted ‘the UK supply chain is having a bit of a ‘mare right now. This is having a knock-on effect with some of our restaurants across England, Scotland and Wales. We are doing everything we can to get the peri-peri back where it belongs – on your plates.’ See also below.

• The Caterer reports that ‘Nando’s is sending 70 of its team members to help short-staffed suppliers after a lack of ingredients forced a number of its restaurants to close.’ This supports out ‘convoy’ suggestion that the industry can only move at the speed of its slowest part.

• Further comment. See premium email.

• The Telegraph politicises the situation saying that Brexit is not to blame for empty shelves as ‘the UK is far from alone in facing driver shortages’. It points to other factors such as ‘new tax rules and the pingdemic.’. The Telegraph has pointed to shortages in Germany.

• Further comment. See premium email.

Company news:

• Turtle Bay has started work on a new restaurant in Durham.

• Knead Pub Group has sold four venues to RedCat.

• Toca Social, a football-based bar, has opened at The O2.

• Bloomberg reports that Tim Horton’s China operation is set to go public via a merger with Silver Crest Acquisition Corp.

• Following its full year numbers yesterday, the Press has focused on the statement from Fulham Shore that it has identified 150 sites for expansion. Rents are markedly down on 2019 (albeit for new sites) and opportunities are legion. The Times also reports that the group is thought to be close to signing franchise deals in Portugal, Greece and Japan.

• Just Eat, which reported H1 numbers yesterday, has said that it would not be appropriate to sell the business to a bigger rival. CEO Jitse Groen says that a ‘merger’ with a rival was “not absolutely logical at the moment.” The company is under some pressure as it has fallen back into losses as a result of its expansion plans.

HOTELS & LEISURE TRAVEL NEWS:

• TUI has announced further holiday cancellations (in this case to Florida and Cancun) as a result of “ongoing uncertainty around travel”.

• Cruising is picking up a little – albeit from levels of zero – with the Port of Southampton reportin its busiest month of the year for cruise departures in August.

• The latest Europe Hotel Construction Pipeline Trend Report from Lodging Econometrics (suggests that the European hotel construction pipeline increased 7% by projects and 11% by rooms year-over-year at the end of Q2.

• STR reports that the ‘United Kingdom leads the construction pipeline with 345 projects (52,065 rooms).’ It says Germany and France are in numbers two and three positions. London is the busiest city, followed by Dusseldorf, Paris & Moscow.

• Further comment. See premium email.

• STR expects US occupancy to rise by almost a third to 51.7% this year. Room rates should rise by 12%. Both numbers are compared to a very depressed 2020. STR says that leisure demand is back but business demand has some way to go.

• US long-stay specialist Highland Group says it is seeing ‘record high demand, rapidly increasing [room rates] and a large decline in the supply pipeline.’

• Airport association ACI Europe has said that Europe’s airports are still reliant on debt in order to operate. Demand has not recovered to levels where the operators can stand on their own feet. ACI says ‘the first six months of 2021 were worse than last year as passenger volumes further decreased by more than a third – the direct result of travel restrictions reinstated at the beginning of the year which remained throughout spring.’

FINANCE & MARKETS:

• The ONS reports that UK unemployment fell from 4.8% to 4.7% in the three months to June. The number of people in employment rose, the number of vacancies hit record levels and numbers on furlough fell to the lowest level since the scheme was introduced.

• The ONS says average total pay, including bonuses, rose by 8.8% in the year to June. Excluding bonuses, it rose by 7.4%.

• Further comment. See premium email.

• The very strong wage growth could put pressure on the Triple Lock. Whilst the government promised to retain this, it could be unaffordable.

• Further comment. See premium email.

• Sterling weaker at $1.3742 and €1.1725. Oil lower at $69.33. UK 10yr gilt yield 0.57%. World markets mixed yesterday and London set to open up by around 28pts as at 7am.

RETAIL WITH NICK BUBB:

• Nick is on a well-earned break. Back after the Bank Holiday.

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 17 Aug 21 Fulham Shore FY results

• 17 Aug 21 Just Eat Takeaway.com H1 numbers

• 18 Aug 21 Carlsberg H1 numbers

• 19 Aug 21 Rank FY numbers

• 1 Sept 21 PPHE H1 numbers

• 2 Sept 21 Jet2 AGM

• 9 Sept 21 Gear4Music AGM

• 15 Sept 21 Restaurant Group H1 numbers

• 21 Sept 21 Compass Group full year update

• 22 Sept 21 Ten Entertainment H1 numbers

• 23 Sept 21 Playtech H1 numbers

• 1 Oct 21 JW Wetherspoon

• 5 Oct 21 Gregg’s Q3 update

• 13 Oct 21 Marston’s FY trading update

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 23 Nov 21 Compass Group FY numbers

• 24 Nov 21 Britvic FY numbers

• 30 Nov 21 Marston’s FY 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.