Drinks sales, tax, labour, vacancies, Fever-Tree, McDonald’s etc.:

A DAY IN THE LIFE:

Language is a fascinating topic. Likewise statistics. You’ve got to be both careful as to both which you use and how you frame them when they’re trotted out.

Added to that, statistics can be (and they most certainly are) misused.

They can be inappropriate in themselves or inappropriately put together. Or they can be put together appropriately and then a wilfully incorrect conclusion can be drawn.

We’ve seen plenty of that recently and then the wording can be ambiguous. For example, if a car is stolen every seven minutes in the UK, then couldn’t an alien conclude that you could bring  the number of thefts down to zero by simply locking it? And (statistics aren’t needed here) you might wear a tin-foil hat because you think the government has been spying on you but don’t you realise that your vacuum has been gathering the dirt for years?

Anyway, rambling a bit here so just remains to wish all a pleasant weekend and move on to the news:

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PUBS & RESTAURANTS:

Drinks Recovery Tracker:

CGA’s Drinks Recovery Tracker shows that ‘drinks sales continued to lag behind pre-pandemic trading last week, ahead of a much-needed lift to pubs, bars and restaurants from the easing of COVID-19 restrictions.’ It says that ‘average drinks sales by value in Britain’s managed pubs, bars and restaurants in the week to Saturday (22 January) were 11% below the same week in 2020. It extends a tough period for the licensed sector, after shortfalls of 18% and 12% in the first two weeks of 2022—though these were an improvement on a 25% drop in the last three weeks of 2021.’

CGA says ‘there is cautious confidence that drinks sales may pick up after Plan B restrictions were eased in England on Thursday (27 January). The end of mandatory COVID-19 passes for nightclubs and big events should give a boost to the late-night sector in particular.’ It points out that ‘drinks sales in England were 10% down on 2020 levels, but in Scotland and Wales, where restrictions have been stricter, they were 25% and 24% short respectively. The easing this week of some restrictions in Scotland and Wales—including the reopening of nightclubs and end to crowd limits—should give these markets a lift too, but hospitality businesses continue to face constraints here.’

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Calls for lower rates of taxation.

Trade bodies including the BBPA, SIBA and the Independent Family Brewers of Britain, alongside CAMRA, have called on the Treasury to take the opportunity to reset taxation that Covid has provided and ‘look again at the tax burden heaped on the sector.’ In an open letter to the Chancellor, the ‘One Voice for Beer’ group make clear their broad support for the Government’s Alcohol Duty Review, including key proposals that incentivise consumption of lower-strength products and, for the first time, recognise the important role of pubs within the duty regime. 

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Labour issues:

The government has been both praised and criticised for proposing schemes whereby job-seekers would lose benefits if they did not accept work in any other field within four weeks. Such schemes, often deemed crowd-pleasers, have been tried before. Responding to the launch of the new Department for Work and Pensions scheme, UK Hospitality CEO Kate Nicholls says ‘we hope that this new Government initiative will contribute to plugging hospitality’s jobs gap, which remains a huge threat to recovery for the sector and, by extension, the wider economy.’

Ms Nicholls says ‘with restrictions now lifted, it has been heart-breaking to see venues that were so desperate to trade fully for the first time in nearly two years, forced to reduce their opening hours or simply not open at all due to a lack of staff. This is a serious threat to businesses that are carrying huge debts and little or no cash reserves, especially as we get closer to a cliff edge in April when the sector faces a rise in VAT, business rates and labour costs.’

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Premiumisation.

Premiumisation could help sales to hold up if and when the consumer squeeze impacts spending on discretionary items. Better off customers spend a lower proportion of their incomes on essentials and they may have more of a financial buffer when it comes to maintaining spend. Consumer confidence experts GfK have looked at premiumisation, albeit globally, and have said that rising costs may ‘drive a supply-side move towards premiumization that will run alongside the demand-side consumer preferences.’ It says ‘add this to the fact that premium products generally carry higher margins, and the attraction of a focus on premiumization as a strategy for 2022 is clear.’

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The price of beer is estimated to increase by 50p across the country, but London is set to be worst affected as industry experts warn pub inflation has now risen by 10%. Industry leaders have called for VAT to remain at 12.5% ahead of a rise of up to 20% in the spring, in a move to try and cap the rise in beer prices.

Vacancy rates.

Research conducted by the BRC suggests that retail vacancy rates fell slightly (by 0.1pp) between quarters three and four last year. This is the first fall in the proportion of shuttered shops since early 2018. Some 14.5% of retail units are said to be empty. Voids are still some 0.7pps higher than they were in Q4 2020.

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COMPANY & OTHER NEWS:

Fever-Tree Drinks plc yesterday updated on trading for 2021 saying that revenues grew by 23% overall to £311.1m. The UK grew by 15%, the US by 33% and Europe by 34%. The company says it ‘delivered an excellent top line performance in 2021 with strong growth across all our key markets.’ Regarding the future, the co says ‘we expect to deliver full year revenues of c.£311 million revenue, an increase of 23% year-on-year (26% at constant currency) and ahead of the guidance provided at our Interim Results in September.’

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Fever-Tree’s shares fell yesterday on what was, broadly, a positive update. The shares finished the day down by around 8.5%.

McDonald’s Corp yesterday reported Q4 numbers & missed analysts’ estimates. The company reported that sales were up by 13% at $6.01bn for the quarter, a shade below estimates of around $6.03bn. LfL sales were up 12.3% from a year ago and 10.8% on a two-year basis. Menu prices have been increased. Same store sales in the markets segment that includes the United Kingdom, Australia and France, were up by 16.8%, slightly ahead of estimates. Much attention has focused on the burger giant’s comments on supply issues.

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The MCA reports that Black Sheep Coffee has been backed by the Covid Future Fund, a fund which offers financial help for often lossmaking but fast-growth ‘innovative’ businesses. Gabriel Shohet, co-founder of Black Sheep Coffee, said  the company was looking to raise further funds this year at almost double the value that the Future Fund converted, with 46 new shops being planned.

Britain’s Most Admired Businesses awards 2021 has named Greene King as the best pub operator. The business ranked third in the Restaurants & Pubs category behind Greggs and McDonald’s respectively.

Caravan is set to open its sixth restaurant in London next month, located at Reuters Plaza in Canary Wharf.

Gordon Ramsey is set to open ‘Restaurant 1890’ at the Savoy, with the menu paying homage to fine dining chef Georges Auguste Escoffier.

Pho is set to open a 100-cover restaurant in Nottingham, located on the ground floor of the former National Video Game Arcade building in Hockley. 

Costa Coffee has been named the country’s favourite coffee shop for the 12th year in a row, according to a survey by World Coffee Portal. Last year Costa Express installed a further 1,325 machines and launched its first Costa Express Hot and Iced Drinks machine.

Tesco will encourage shoppers and staff to continue to wear masks, with Sainsbury’s, John Lewis and Morrisons also asking shoppers to wear masks. The government is still advising people to wear masks in enclosed or crowded spaces and when meeting strangers, despite dropping the legal requirement to do so.

LEISURE TRAVEL & HOTELS:

Sky reports that ‘the Forestry Commission is in line for a multimillion pound windfall from a prospective sale of Britain’s biggest standalone provider of forest-based cabin and lodge vacations.’ It says that the PE backers of Forest Holidays ‘have hired investment bankers to explore a sale that could value it at more than £250m.’ The company trades from 12 locations including a site in Sherwood Forest and another at Beddgelert in Snowdonia, is controlled by Phoenix Equity Partners.

Travel Weekly reports that ‘Leger Shearings is on target to report a record January with the highest monthly sales since the group was formed in mid-2020.’ It says ‘the removal of testing whilst abroad in order to return to the UK we know is a huge relief to our customers.  The fear of having to isolate in a foreign country was certainly having an impact on booking confidence, specifically on our target demographic and the nature of our fully escorted tours.’

Recent past & outlook. The UN World Tourism Organisation (UNWTO) data suggests that destinations missed out on more than two billion international visitors in the past two years. The latest UNWTO World Tourism Barometer notes a ‘moderate’ rebound in international tourism in the second half of 2021, with arrivals down 62% on pre-pandemic levels over the third and fourth quarters. Companies have recently commented on a rapid rebound in bookings:

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Carnival updated yesterday saying that ‘as of January 13, 2022, eight of our nine brands, or 67% of capacity, had resumed guest cruise operations as part of our gradual return to service.’ It says it has recently seen a pick-up in cancellations.

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OTHER LEISURE:

Cineworld has updated on its litigation situation, saying that it ‘notes that Cineplex has submitted, on 27 January 2022, a cross-appeal to Cineworld’s own appeal in respect of the decision of the Ontario Superior Court of Justice. Cineplex’s cross-appeal suggests that it should be awarded alternative forms damages, if the Ontario Court of Appeal determines that the damages award of the Ontario Superior Court of Justice is incorrect.’ Cineworld says ‘as previously noted, Cineworld disagrees with the decision of the Ontario Superior Court of Justice and it also disagrees with the submissions of Cineplex in its cross-appeal. Cineworld shall respond to the cross-appeal as part of the appeal process. Cineworld does not expect damages to be payable whilst any appeal is ongoing.’

Apple yesterday reported record sales over Christmas and beat profit estimates. Sales hit $123.9bn in the quarter to end-December. The group’s shares rose by 4%.

FINANCE & MARKETS:

The US Commerce Department yesterday reported that the US economy beat analysts’ estimates and grew by an annualised rate of 6.9% in Q4. This represents the fastest period of growth since 1972. For the year as a whole, the US economy grew by 5.7%.

Sterling mixed at $1.3409 and €1.201. Oil price higher at $89.97. UK 10yr gilt yield up 3pts at 1.23%. World markets better yesterday and London set to open up by around 7pts as at 7am.

RETAIL WITH NICK BUBB:

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