JD Wetherspoon, inflation, demand issues, rents, labour shortages etc.:

A DAY IN THE LIFE:

So, what’s better than having a Black Friday-type event in November?

Well, it’s clearly having two of more of them during the month and, with that in mind, we can report that we at Langton are now getting ‘Single’s Day’ offers through from branded consumer goods companies.

This may be on the basis that we either some desire to pick up yet more, foreign, spending occasions (to add to Black Friday and Halloween) or are reckless consumer spendthrifts when given the slightest excuse or are part of a bigger UK trend to try to unhitch from Europe, give the US the slip and hitch ourselves to the Far East by whatever means available.

Anyway, it gave us the chance to send out the tweet below:

Getting ‘offers’ now for Xmas & Black Friday. And also Singles Day, which is a new one. Levi’s offering jeans for that occasion. Clearly not seen me. I’m not single & in jeans I look like Steinbeck’s Lennie Small…

On to the news:

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PUBS & RESTAURANTS:

Inflation:

Data company Kantar has commented on inflation saying that grocery inflation rose to 2.1% in October, its highest rate since last year, at a time when retailers were cutting promotions in response to the Covid pandemic. The CPI is expected to reach 5% at some point next year and, as always with inflation, it will only fall if one part of the economy, labour, corporates or government, don’t pass it on to another.

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The consumer:

The comments on inflation, above, have an impact on how much cash consumers will have available to spend on non-essential items and services (such as those supplied by the hospitality industry).

The NIESR spells it out when it says ‘a combination of rising prices, lagging wages and the withdrawal of the Universal Credit uplift will all contribute to a massive rise in destitution and increased regional inequalities, despite the modest increase in the national minimum wage.’ That’s uplifting stuff. More detail.

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Rents and arrears:

The Times interprets upcoming new legislation and reports that ‘commercial landlords have missed out on more than £7 billion in unpaid rent during the pandemic and have been told they will be expected to write off any Covid-related rent arrears if tenants are struggling to pay.’ It says ‘owners of offices, shopping centres and other commercial properties were owed £6.97 billion as of the end of June, according to Remit Consulting. Tenants at the moment cannot be evicted but tenants who can pay, should pay, says the government. But the devil will be in the detail – and in obliging them to do so.

Labour shortages:

UKH CEO Kate Nicholls has warned MPs that there is an acute shortage of staff across the industry. She said the vacancy rate is running at around 10%, or some 200,000 staff. The UKH boss says ‘I don’t think we can give the hospitality we would like to around Christmas because we would like to be operating at full strength and full capacity and not turning away business’. She adds ‘in our supply chain, we are getting around 80% fulfilment. So, 20% of all products in all deliveries are not being delivered and we can’t really say what it is.’

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Contract catering:

CGA reports that contract caterers’ third-quarter sales are up year-on-year, but they still significantly lag pre-COVID levels. It says ‘third-quarter sales at leading contract caterers grew by half from 2020 levels as the sector continues its recovery from the pandemic’ and says its research ‘shows sales from July to September 2021 were up by 52% on the same three months in 2020—a period when many venues served by caterers were under substantial restrictions.’

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Scotland:

Hospitality industry representatives in Scotland have said that expanding the vaccine passport scheme north of the border “has the potential to destroy many businesses.” It is currently limited to nightclubs and sporting stadiums, but ministers may extend it to pubs, restaurants, gyms and other public venues.

JD WETHERSPOON – Q1 TRADING UPDATE:

JD Wetherspoon has today updated on its Q1 trading, plus an additional fortnight, and our comments thereon are set out below:

Headline numbers:

The company says ‘like-for-like sales for the first 15 weeks of the financial year were 8.9% lower than the record sales achieved in the same period in 2019.

It reports that wet sales were down 9.6%, food down 8.1%, fruit/slot machines down 12.3% and hotels were up by 11.5%. It says ‘this is an improvement compared to LfL sales of minus 17.8% in the last 10 weeks of the previous financial year (ten weeks to 25 July, 2021), when pubs reopened inside – although restrictions applied for most of that trading period.’

Company analysis of trends:

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COMPANY & OTHER NEWS:

The Morning Advertiser reports that JD Wetherspoon is dropping its prices on a variety of meals across 660 of its sites until the end of February next year.

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Pret a Manger has reported that its sales in the City of London and Canary Wharf have risen to 86pc of pre-pandemic levels. The company says ‘we continue to see strong performance across the UK, especially in the City and in our domestic travel, where we’re cautiously optimistic about long-term growth as more and more people come back to the office and work travel picks up.’

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The Times reports that the co-founder of Gopuff has accused his rivals of being “super-lossmaking.” The $15 billion American delivery business has launched ‘an ambitious national expansion across Britain.’

Krispy Kreme has reported Q3 numbers saying that ‘our third quarter results demonstrate the benefits of our omnichannel and global expansion strategy, which allow us to meet consumer demand with premium, fresh doughnuts, in a capital-efficient manner.’

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Rémy Cointreau has taken a €80m loan through Crédit Agricole d’Ile-de-France as part of the ongoing optimisation of its financial structure.

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Vinoteca is set to open a new 95-cover site at the new Borough Yards development, marking the chain’s sixth location in London.

Black and White Hospitality has opened a new Marco Pierre White Leicester Square venue, called Mr White’s with the menu centred around steaks.

A survey by KAM Media on behalf of Food Alert has found that 69% of consumers want to see hand sanitising stations become a permanent feature in hospitality venues. More than half wanted venues to have ‘extreme hygiene measures’ clearly in place.

Stay in a Pub has announced that Sophie Braybrooke is to be its new CEO. It says ‘Sophie takes over the baton from Charles Cryer the outgoing CEO who led Stay in a Pub’s first phase of business development following a £750k angel investment.’

Exports of New Zealand wines increased 9% YoY to NZ$599m, with the September quarter 2021 average value up 4%. However, difficult conditions saw the overall harvest down 19%.   

LEISURE TRAVEL & HOTELS:

The European Travel Commission (ETC) forecasts that European levels of travel are not expected to surpass pre-pandemic volumes until 2024.

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Mollie’s hotel and diner appoints Fleurets to help drive ambitious expansion plans with 100 new sites planned for the next 10 years.

The head of European airports association ACI Europe, Olivier Jankovic, warns that Europe’s airports face a second year of ‘massive losses’ and ‘unprecedented pressures’ from ‘the dominance of ultra-low cost carriers’. Jankovic also warned of ‘an uneven and volatile recovery’.

Richard Fain is to step down as CEO of Royal Caribbean Group in January after more than 33 years in the job. Chief financial officer Jason Liberty will succeed him in the role.

STR reports that U.S. hotel demand should approach ‘full recovery in 2022.’ It says ‘we have essentially moved up the top-line recovery timeline by one year, with the caveat that improved RevPAR projections are largely due to ADR.’

OTHER LEISURE:

Sky News reports that The Tote will raise funds through an equity issue at a substantial premium to its last valuation. Last December, it tapped investors for £20m to fund the diversification of its business into football.

Meta, formerly known as Facebook, plans to showcase its virtual reality and augmented reality devices to consumers by rolling out physical stores. The company sells several products, including headsets and video chat devices, that customers could then try out in person.  

FINANCE & MARKETS:

The NIESR has commented on the global economy saying that ‘the global growth story has evolved from a bounce-back to a slowdown, but inflation fears are escalating as the virus continues to crimp global economic activity, severe supply chain disruptions hold back the recovery and demand has been stimulated by loose monetary policies.’

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The NIESR comments on global inflation saying its ‘OECD consumer price inflation forecast sees a sustained increase at 3.2 per cent until 2022, moderating to 2.6 per cent in 2023, and remaining above the rates seen before the pandemic.’ Rival observers have suggested that inflation in the UK is expected to hit 5% during 2022.

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The NIESR has said that the UK economy risks seeing its recovery stall due to supply-chain bottlenecks. It adds that household incomes will be “squeezed by a combination of earnings growth lagging inflation, rising interest rates and tighter fiscal policy”.

Sterling weaker at $1.3551 and €1.1704. Oil price higher at $85.27. UK 10yr gilt yield down 2bps at 0.83%. World markets lower yesterday and London set to open down around 9pts as at 7am.

RETAIL WITH NICK BUBB:

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