Tasty, Xmas trading, the consumer, inflation, supply, holidays & other:

A DAY IN THE LIFE:

With Christmas safely behind us, Langton has confirmed its previously held view that a) the brittle, lacerating plastic that’s used to encase earphones, toys, small tools and the like is the work of the devil and that b), unless the aforementioned plastic is used, the time taken to unwrap a present is something like the cube root of the time taken to wrap it.

But to stick with a), why would anyone consider it to be a good idea to package something so securely that the person opening it needs to either resort to powered tools to get the job done or risk losing the ball of their thumb and the flesh covering a couple of knuckles (Langton, York General A&E, circa 2012) in tearing the thing apart?

Anyway, no serious injuries to date but there’s still a price to be paid in mentally exiting Christmas in that someone has poured glitter on my favourite woolly hat. And that, whilst it was bad enough in late December, now just looks weirdly sad. On to the news:

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PUBS & RESTAURANTS:

Inflation:

Bloomberg comments that inflation during 2021 ‘steadily broadened to affect the entire economy’. It says this raised the question of whether ‘central banks had left it too late to take action.’

Trading:

Please feel free to e/m us with updates as to how you a) found Christmas & New Year trade and b) what you are seeing in January.

There have been calls from the hospitality industry for customers not to desert their local pub during Dry January. Soft drinks, of course, are available. As is food but, as commentators point out, a poor Christmas means that operators have not built up the reserves they may need to get through this month and next.

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Questions re January. Fuller’s CEO Simon Emeny says there could be ‘enormous pent-up demand’ this month as some customers didn’t go out in the way they had intended in December.

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CEO of Adnams, Andy Wood, told the BBC that trade was down around 50% over Christmas. He says ‘we need that so we can rebuild consumer confidence but also have the confidence ourselves so we can invest in our businesses again’ and called for more government support in the meantime.

Sky reported health minister Gillian Keegan to say that hospitality venues that she saw were still “pretty full” over the Christmas period. She said ‘I think people are still going out, but they are just taking a lateral flow test before and obviously being a bit more cautious.’

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Springboard reports that footfall at shopping sites in the UK on Boxing Day fell sharply on pre-pandemic levels. It reports that shopping centres were down almost 50% with high streets and retail parks down by 38% and 40% on the same day in 2019. The larger part of the drop is down to Covid although Springboard does say ‘Sunday generally has the lowest footfall on any day in the week so a comparison with 2019 when Boxing Day fell on a Thursday will always have meant that footfall would be lower than two years ago.’

M&B brands O’Neill’s and Harvester are offering 50% off the price of main meals until 6 and 5 January respectively.

Supply.

Goods checks on produce coming into the UK from the EU began on 1 Jan. The impact on deliveries has yet to be assessed but, with much more red tape now slowing the process and raising costs, it is unlikely to be positive. The Cold Chain Federation, which deals with chilled goods producers, users and transporters, says imports will be ‘more expensive, less flexible and much slower.’

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S4 Labour reports that hospitality sales fell by 30% over the Christmas period when compared to 2019 figures. Sites within London experienced a 50% decrease in sales on 2019 levels, whilst sites outside of the Capital saw like-for-likes drop by 26%.

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The consumer:

Gas prices are around 5x the level that they were at the beginning of 2021. The government is coming under some pressure to remove taxes in order to mitigate the impact on consumers. Per the BBC, The Resolution Foundation predicts higher energy bills, stagnant wages and tax rises could leave households with a £1,200 a year hit to their incomes. Its report highlights the rise in the energy price cap and National Insurance contributions in April.

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Labour availability.

It is likely that staff absences will increase as a result of the spread of the Omicron variant and the resulting 7dy stay-at-home rules associated with it.

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Other:

Record low number of insolvencies. Insolvency specialists at Interpath Advisory said furlough measures particularly reduced the number of non-voluntary insolvencies over the year but warned there could be a rise next year. The firm said there were 618 administrations in the UK in the 11 months to November with this expected to increase by the end of the year.

Home secretary Priti Patel is seeking to extend licensing hours from 11pm from Thursday 2 June until Saturday 4 June to mark the Queen’s Platinum Jubilee.

COMPANY & OTHER NEWS:

Tasty has updated on trading saying that December trading was disappointing. It says ‘trading across the Group for the second half of the year up until December 2021 was extremely encouraging. However, along with the rest of the hospitality sector, December, normally the Company’s strongest performing month, was disappointing, especially given the level of the preceding few months’ trading.’

Tasty adds ‘the rising infection rates of the latest Omicron Covid-19 variant and in particular the reinstatement of working from home advice by the UK Government, significantly reduced the number of customers eating out and specifically deterred the larger Christmas bookings. As a consequence, trading for the peak December trading period was considerably weaker than anticipated.’

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Per The Caterer, Hard Rock Cafe UK has received confirmation of continued financial support from its US parent firm to allow it to keep operating for at least the next 12 months. Hard Rock UK saw transactions at its restaurants decline 67% in 2020, while retail transactions were down 81%. The company reported a £10.4m pre-tax loss in 2020, compared to a £1.1m loss in 2019.

Marston’s is reducing the rent payable to 50% of the headline rent, starting from 26 December for its tied tenants in Wales, with the reduced rent remaining in place until restrictions are lifted. 

Greene King is also introducing 30% rent concessions for tied tenants in Scotland and Wales from Boxing Day, as stricter restrictions are introduced in those locations.

LEISURE TRAVEL & HOTELS:

France has banned all non-essential travel from the UK from 17 December. Christmas and new year ski holiday plans have been thrown into disarray, and operators have been left scrambling to find alternative trips for British skiers. France has, however, suspended some Covid restrictions that would have prevented UK nationals living in an EU country from driving through the country to get to their destination.

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Royal Caribbean claims that cruising remains one of the few places one can vacation knowing that almost everyone you meet is fully vaccinated. Since cruising restarted in the U.S. in June 2021, the Royal Caribbean Group has carried 1.1 million guests with 1,745 people testing positive – a positivity rate of 0.02%.

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Germany is to ease travel restrictions on UK citizens from today.

There are concerns that, with as many as one in ten staff off sick, train services will be reduced as commuters return to work (if they do).

STR reports that ‘U.S. hotel occupancy came in lower than the previous week but reached an all-time high on Christmas.’ It says that in the week to 25 Dec, occupancy was 44.3% (down 8.7% on 2019) and ADR was up 0.5% on the same period in 2019. This left resultant REVPAR down 8.3%.

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OTHER LEISURE:

Sony is to delay the release of its Marvel superhero movie “Morbius” until April 1 due to the Omicron variant and the impact that it would have on attendance. The movie has been delayed a number of times already but was scheduled to be released on 28 Jan. Though it should not come as a shock, this will be something of a setback for cinema operators.

The estate of singer-songwriter David Bowie has sold the publishing rights to his “entire body of work” to Warner Chappell Music. Showbiz publication Variety has suggested the deal was worth “upwards of $250m (£185m)”.

Sportech has announced that ‘it has signed and completed an agreement to sell its entire interest in its contract for the supply of lottery systems to Loteria Electrónica Internacional Dominicana…to Inspired Entertainment Inc [in] a deal worth up to $14.5m.’

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The Guardian reports that William Hill could be fined ‘after it emerged that it submitted incorrect data to the Gambling Commission.’ It says that the admission that the data was incorrect has led the ‘regulator to tear up its analysis of the impact Covid-19 has had on betting habits.’

FINANCE & MARKETS:

Checks on goods coming into the UK from the EU were introduced on 1 Jan and feedback on what this has meant in practise is awaited. City AM cites a ‘former senior civil servant in charge of Brexit planning’ when it reports ‘many British businesses may “give up importing” as a result of new strict rules that have come into force.’

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The FCA reports that around half of the EU financial firms that were given a temporary license to operate in the UK immediately after Brexit have gone on to apply for full authorisation.

The Centre for Economics & Business Research has said that the global economy should grow by 4% this year versus the 5.1% that it expects to see for 2021. The CEBR has edged back its 2021 estimate for the UK from 6.7% to 6.6%.

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The Nationwide reported last week that UK house prices rose by 10.4% in calendar 2021. This is the fastest rate of growth since 2006. Prices are now some 16% higher than they were at the start of the Covid-19 pandemic.

Numbers compared to pre-Christmas. Sterling stronger at $1.3465 and €1.1909. Oil price up at $78.98. UK 10yr gilt yield up 4bps compared with Christmas Eve at 0.97%. World markets broadly better with London set to open up around 43pts at 0.97%.

Inflation in Turkey has hit 36%.

RETAIL WITH NICK BUBB:

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