Tortilla, Nightcap, supply, trading, aid, isolation periods, holidays etc.:

A DAY IN THE LIFE:

So when do you stop saying Happy New Year?

It could be about now but, whenever it is, it’s likely to be before you stop accidentally putting 2021 down when you write the date instead of 2022 and, now that none of us write cheques anymore, there might be fewer costly reminders around to tell us we’re getting it wrong.

Anyway, Happy New Year and welcome to 2022’s first full week. On to the news:

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PUBS & RESTAURANTS:

Supply issues (and producer prices).

Growing perception that supply problems are easing. But no data yet covering the period since import checks were introduced on goods coming from the EU on 1 Jan. Commenting on the supply situation (which clearly may be different for the building industry when compared with hospitality) Markit says ‘the worst phase of supplier delays seems to have passed as the availability of construction products and materials continued to turn a corner in December.’

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Morrisons is to scrap “use by” dates on most of its milk. This should ease supply issues and reduce food waste as people, over time, may feel able to buy older milk. Morrison’s says ‘wasted milk means wasted effort by our farmers and unnecessary carbon being released into the atmosphere.’

Current trading:

CGA reports that ‘Omicron fears cut Christmas drinks sales by a quarter.’ It says that ‘Britain’s On Premise drinks sales fell over Christmas as consumers reined in celebrations in pubs, bars and restaurants.’

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KAM research reports that the average person visits the pub 24 times a year and says ‘94% of pub-goers believe that visiting the pub is good for their mental health.’ KAM adds ‘95% of people believe that UK pubs play an important part in creating a vibrant community’ and ‘42% of pub goers either have used, or are interesting in using pubs for delivery during lockdowns- showing that they still want to be connected to and support their local, open or not.’

Government aid.

Word from government is still that no additional help is to be provided (in addition to that already in place and the £6,000 per site now offered. On 21 December, the government announced ‘at what is often their most profitable time of year, many pubs and restaurants have seen cancellations and reduced footfall as people have responded to the rise in cases ahead of Christmas, with Hospitality UK reporting that many businesses have lost 40-60% of their December trade, often their most profitable month.’ It then offered the £6k per unit and says ‘around 200,000 businesses will be eligible for business grants which will be administered by local authorities and will be available in the coming weeks.’

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Staff availability and cost:

Former vaccines minister Nadhim Zahawi has said that cutting the Covid self-isolation period to five days would “certainly help” in any return to normality. That is doubtless true but it would depend very much on how likely people were to be testing negative by Day Five. With a full infection, the chances of a negative test may be rather low. Mr Zahawi told the BBC the country was on the road “from pandemic to endemic”.

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The MCA reports a number of operators as saying that staff absences have ‘been rocketing in recent weeks.’ It quotes Gusto Italian as saying that the situation is “very difficult”, with around 40% of its staff off at some point over the past month’. The peak saw 20% off work at the same time.

Sainsbury’s is to put its basic rate of pay up from £9.50 to £10 an hour from 6 March. The supermarket will pay £10.50 in outer London and £11.05 in inner London. This could put pressure on other employers and, ultimately, raise product prices. 

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Consumers:

Interactive Investor reports that today’s 30yr olds are worse off than were people of the same age, 30yrs ago. It says real wages are virtually unchanged whilst the real cost of essentials such as housing, have risen (although mortgage rates are lower). Student loans, a virtual tax on higher earners, hits net cashflow for younger people and car ownership is, for many, an impossible dream. Pensions will be lower, there are larger numbers of older people to be supported and the NHS will cost more to fund. This has implications for spending.

Sky reports data released by the Office for National Statistics as showing that 25% of people whose cost of living had increased in the last month are using their savings to fund the rise. That can’t be a permanent state of affairs. Consumers told the ONS that fuel price rises, the cost of food and energy bills were the main causes for budget concern.

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A slight fillip to spending in that Virgin Media and O2 have announced they will not impose roaming charges this year. EE and Vodafone, on the other hand, are reintroducing the charge this month whilst Three will reintroduce them in May.

Labour has suggested a windfall tax on oil companies in order to help subsidise payments by domestic consumers.

WFH again taking a toll.

Springboard reports that December retail footfall was down 18.6% on 2019 levels. This varies across regions. The national total compares with the still-difficult minus 14.5% registered in November. Springboard reports that retail footfall was some 24% below pre-pandemic levels whilst retail parks were a more resilient minus 4.9%.

Vaccine passports.

Fuller’s CEO Simon Emeny has told the Morning Advertiser that ‘people who elect not to be vaccinated may be denied the opportunity to do certain things.’ Questioned on the situation re Novak Djokovic in Australia, Mr Emeny said that, whilst it would not be acceptable to the British public to force people to be vaccinated, those that chose not to do so may find themselves unable to do things that they had previously taken for granted.

The WBPA reveals that , on average, pubs in Wales lost £16,000 in revenue over the two week festive period from 19th December to 1st January, down 34% from the same period in 2019. Emma McClarkin, Chief Executive of the Welsh Beer and Pub Association said ‘Should alert level two restrictions remain in place it is evident that additional financial support will be needed to support the sector already at breaking point.’

COMPANY & OTHER NEWS:

Tortilla has updated on full year trading saying it has turned in ‘a very strong FY21 performance underpinned by a year of transformational growth.’ It adds that group revenue increased 79% to £48.1m (FY20: £26.8m; FY19: £35.4m)’ and says that LfL sales vs ‘2019 increased by 23.8% despite the numerous lockdowns/restrictions.  Excluding Q1, which was significantly impacted by lockdowns, LFL revenue increased by 30.3% versus FY19.’

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Nightcap has updated on trading and openings for its H1 ended 26 December 2021 saying that ‘net sales were £15.5 million for H1 FY2022, resulting in a 46.2% net sales increase on the same period in 2019 and a 22.4% like for like increase compared to the same period in 2019.’ It says that for the period excluding the Plan B ‘group net sales increased by 52.7% and 28.3% on a like for like basis for the 24 weeks ended 12 December 2021.’

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McDonald’s in Japan have told customers they will have to make do with small portions of fries for another month after further supply chain problems.

E-mart now controls a 67.5% stake in the Starbucks’ South Korean business, marking an end to Starbucks Coffee International having direct involvement in Starbucks Korea.

Papa John’s International has announced a partnership with private equity firm FountainVest Partners, which will see it open more than 1,350 stores in South China by 2040.

LEISURE TRAVEL & HOTELS:

EasyJet reports there were almost three times as many flights bought in the UK in the hours following the relaxation of Covid testing requirements for travellers returning to the UK. British Airways Holidays said searches for holidays on its websites increased by nearly 40% compared with the week before.

Jet2.com and Jet2holidays CEO Steve Heapy has credited industry lobbying efforts for the government’s move to ease travel curbs. Heapy said ‘We’d asked for the removal of all testing, and that didn’t happen (but) I think they’ve made a sensible compromise.’

Chief commercial officer of Awaze, Simon Altham, has said ‘the clear difference this year is the increased demand for off-peak breaks, particularly between now and the end of March.’ The company reported a 57% increase in bookings made between Boxing Day and New Year’s Eve for March compared to the same period in 2019, and an 11% rise in total first quarter bookings.

Israel will open up to UK travellers from 9 January after scrapping its red list of countries.

Company Rescue reports that the Travel Trust Association ‘revoked the membership of Travel giants, Teletext Holidays and Alpharooms’ on Friday. It says that ‘due to this, both have entered liquidation i.e. the companies have run out of money and any funds left need to be used to pay its debts.’ It says ‘this will leave over 4,000 holidaymakers affected since many still await refunds from cancellations and delays caused from the COVID outbreak.’ Flights will be ATOL protected.

OTHER LEISURE:

West Yorkshire-based Team17, developer of the Worms series of games, has acquired The Label, a USA based indie publisher specialising in mobile subscription games content for an initial consideration of $24m (£17.76m).

Aston Martin Lagonda achieved its target to sell around 6,000 vehicles to wholesalers in 2021, up 82% on the year prior. However, an ‘extensive and challenging development and testing schedule’ meant that it only delivered 10 Aston Martin hypercars to buyers in the final quarter, which it forecasts to cause an estimated £15million loss in underlying pre-tax profits.

France’s data privacy watchdog, CNIL, has fined Google and Facebook a combined €210m (£176m) for hampering users’ ability to stop the companies tracking their online activity. It also fined Facebook €60m for the same reason. Karin Kiefer, CNIL’s head of data protection and sanctions said ‘Rejecting cookies should be as easy as accepting them.’  

Truth Social, Donald Trump’s social media app, is set to launch on 21 February. Similar to Twitter, the app offers features to follow other people and trending topics, according to demo photos.

The Times reports that Virgin Active has reported a loss ‘of almost £600 million in [the now very historic year of] 2020 and conceded that it would take time to rebuild a membership base decimated by the pandemic.’

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FINANCE & MARKETS:

US jobs growth slowed in December per the Fed. The recruitment of just 199,000 people in December reduces (slightly) upward pressure on interest rates.

The UK construction PMI from Markit came in at 54.3 vs 55.5 in November. It is still above the tipping point of 50.0 but represents ‘the weakest rate of expansion for three months. Some survey respondents noted that tighter pandemic restrictions and rising COVID-19 cases had acted as a brake on recovery, especially in the commercial sector.’

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Germany recorded inflation of 5.3% in December, the highest rate since June 1992.

Sterling up at $1,358 and €1,1984. Oil down at $81.79. UK 10yr gilt yield up 3bps at 1.18%. World markets mixed on Friday & London set to open up around 16pts as at 7am.

RETAIL WITH NICK BUBB:

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