Food prices, WFH, Covid & share prices, delivery, labour, Nightcap etc.:

A DAY IN THE LIFE:

We’re in the middle of a (very) long, half-term inspired, weekend in London.

Indeed, it’s so long that it’s six nights. And it’s so far involved braving the trains just before Eunice shut much of the network down and then getting into the office on Friday whilst chunks of the family plotted how to spend as much money as possible, as quickly as practicable, across the Capital’s hospitality industry goods & services.

I clearly favoured the Tate Modern (free) and the afternoon sessions at The Globe (in the pit, also free).

Along with long walks and I got my way but, those free but freezing ventures were topped and tailed, so far, by a couple of monster meals, several pub trips – at an astonishing £6.75 a pint or thereabouts – innumerable coffee shop stops, an Electric Shuffleboard visit (including meal, multiple beers etc), a bulk visit to the theatre to see The Woman in Black and a trip to the Van Gogh experience.

And that just takes us to Monday. Two more days to go. I’m inconsolable. It could be four figures. On to the news.

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ASSESSING THE DAMAGE CAUSED BY COVID…

We commented last week that, whilst the dust can hardly be said to be settling yet, the Stock Market has made some interim decisions as to which companies have suffered the most, via a reduction in their market cap, as a result of Covid.

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PUBS & RESTAURANTS:

WFH.

Remit Consulting reports that workers are returning to their offices across the UK in their greatest numbers since the start of the pandemic. However, everything is relative. Remit says that the average occupancy of offices in the 5dys to 11 February was 23.3%. This is a) better than it was but b) pretty awful. The numbers are compared with ‘normal’ occupancy levels of around 60% – not with pre-Covid actual occupancy levels. It is also somewhat lower than numbers quoted by some others such as Google and the ONS. Remit’s numbers suggest that occupancy has reached levels seen in November before the Omicron variant appeared on the scene.

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Worker behaviour. The Telegraph comments on an Ipsos report that around half of the UK’s workers may be considering new jobs. Or, indeed, no job at all. It says younger employees are the most likely to have itchy feet. It says ‘some workers are believed to have re-evaluated their career choices while on furlough, and working from home has given people the opportunity to move to different areas and potentially take on new jobs.’

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Food price inflation:

The latest CGA Prestige Foodservice Price Index suggests that food and drink price inflation reached 3.5% in December, with further increases likely in the coming months. The report forecasts prices will to rise further over the next three to six months.

Delivery sales:

CGA & Slerp report that ‘Britain’s leading restaurant and pub groups saw their delivery sales reach five times their pre-pandemic levels in January.’ The joint delivery tracker says that ‘groups recorded a 422% increase in sales by value from January 2019. Takeaway sales were 29% up, as consumers continued to shift their ordering towards the convenience of delivery. Added together, delivery and takeaway sales were more than double the level of January 2019, at 138% up.’

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Staffing problems:

KAM Media reports that there could be something of a ‘perception problem’ in the hospitality industry. It says its research suggested that, late last year, hospitality is only considered an attractive career choice by 21% of UK adults. It says that ‘those who have worked in hospitality are much more complimentary, with 28% viewing it as an appealing industry vs 14% for non-hospitality workers.’ It adds that ‘over 55-year-olds see it as a much less appealing industry compared to younger workers.

Shop closures:

PwC reports on information supplied by the LDC saying that over 17,000 chain store outlets closed across Britain last year. This is a gross figure. But it says that there was also another drop in the number of openings, which led to a net loss of 10,059 outlets. This is the biggest fall since 2014. The units include retailers, restaurants, bars and gyms as well as banks, takeaways and hairdressers.

Inflation in the US.

Trade sources suggest that Shake Shack plans to raise its prices by 3%-3.5% in March saying ‘the environment of commodity and labor wage inflation is still taking material impact on our restaurant margins. We expect this dynamic for the foreseeable future.’ Bloomin’ Brands, which owns Outback Steakhouse, has said it will increase prices by 5% in order to compensate for inflation. This is an example of why, in our opinion, it has never been easy (or correct) to dismiss inflation as ‘transient’.

Business rates:

The BBPA is calling for a reform of business rates, saying that the sector has also long suffered from over-taxation on business rates. Pubs pay more in business, per pound of turnover, than any other business sector. The business rates bill for the sector accounts for 2.5% of total business rates paid despite only representing 0.5% of total rateable turnover, an overpayment of £570 million.

The MA reports that rising beer costs are set to have a ‘significant negative effect on pubs’. Suppliers such as Heineken UK have ‘created the precedent’ for cost increases whilst many in the industry struggle with record levels of debt.

A study by the London School of Hygiene & Tropical Medicine (LSHTM) reckons that the ban on junk food advertising by Transport for London has contributed to a 1,000 calorie decrease in unhealthy purchases in people’s weekly shopping. The biggest effects were seen for chocolate and confectionery with an almost 20% decrease, or 317.9 calories, in average weekly household purchases.

CGA data shows that on-trade Tequila sales have  increased by 106% in the past year with total value sales for the year rising from £68.12m to £140.6m. Standard Tequila increased from £40.22m to £81.47m and the value of premium Tequila went from £18.56m to £36.71m.

COMPANY & OTHER NEWS:

Nightcap has updated on trading saying ‘the next of a number of additional planned bar openings in 2022.’ It says ‘in early April 2022 the Group will open The Cocktail Club in Exeter. This bar opening follows the announcement, in January 2022, of the signing of a new Tonight Josephine bar in Cardiff, which too is planned to open in early April 2022.’

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Wagamama has launched its BOX lunchtime delivery concept across London and Leeds; available through Deliveroo. Max Simons-Dukes, senior brand manager at Wagamama, said ‘Guests are searching for a Wagamama-inspired lunch, that’s light, healthy and delivered quickly, whether you’re working from home or in the office’.

The MCA reports that Wingstop UK found success by aligning itself with streetwear and music to appeal to a Generation Z consumer-base. Co-founder Tom Grogan said ‘We have an exciting new restaurant opening programme for Wingstop UK in 2022. We will continue to enter new regions of the UK whilst increasing our coverage in existing cities such as London and Manchester.’

Accounts lodged with Company’s House show that Pret a Manger’s has expressed going concern questions as it is facing uncertainty over further Covid restrictions and a shift to hybrid working. The Guardian says that there was £100m pumped into the business in the autumn last year along with £185m in 2020. CEO Pano Christou says ‘in September last year, we announced ambitious plans to double the size of Pret’s business over the next five years, backed by a £100m injection of funding from JAB and Pret co-founder, Sinclair Beecham.’ He adds ‘since announcing this strategy, Pret has continued to expand its business in the UK and internationally, and we’re confident that we will continue this pace of growth in the coming years. Despite the impact of Omicron on trade in December, our UK shops continue to recover strongly, with our coffee subscription used over a million times every week in the
UK.’

CVC Capital Partners, Brookfield and two Abu Dhabi state funds have bid to buy a stake in the Middle East, North Africa and central Asia Starbucks franchise held by Alshaya Group.

Cann has announced a $27m funding round and its intention to expand into Canada. The cannabis-infused beverage company produces and markets alcohol-free microdosed beverages.

The Times reports that Marugame Udon, Japanese noodle bar chain described by one of its investors as “twice as fast as Wagamama but half the price” has unveiled plans to have at least 100 outlets within five years. The paper reports ‘the chain, which has a menu based around udon noodles and tempura, opened its first site in the UK near Liverpool Street in the City of London last July and has since opened three more at the O2, Canary Wharf and St Christopher’s Place.’

LEISURE TRAVEL & HOTELS:

The Nationwide Spending Report suggests that spending on holidays, airline and cruise bookings has helped to drive up the overall level of consumer spending last month. It says that some 18% more was spent on travel in January this year compared with last.

Storm Eunice has caused the cancellation and delays of hundreds of flights, with rail operators issuing ‘do not travel’ warnings.

The Dominican Republic and Grenada have eased their Covid-19 restrictions, however, passengers arriving from the UK must still present a negative Covid-19 PCR or antigen test taken no more than 72 hours before their arrival, or a vaccination card showing two doses of the Covid vaccine, with the last dose taken at least two weeks before travel.

STR reports that UK regional hotels can expect strong demand this year despite restrictions easing on international travel. Robin Rossmann, STR managing director, said ‘Cornwall and Devon show more business on the books in the first half of this year than last. They will have amazing first and second quarters, and business on the books is at least as strong for the rest of the year as last summer.’

Safestay has confirmed the appointment of Paul Hingston, who today joins the Board of Directors and assumes the position of Chief Financial Officer.

OTHER LEISURE:

The Times reports that a bidding war for podcast company Audioboom could take place. It reports that Sony Music could be interested (in addition to the already suggested Amazon & Spotify).

FINANCE & MARKETS:

Sterling up at $1/3619 and €1.198. Oil price higher at $93.01. UK 10yr gilt yield down 8bps at 1.38%. World markets down on Friday but London set to open up around 25pts.

RETAIL WITH NICK BUBB:

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