DPEU, VAT, April cliff edge, food to go, flight demand & other:

A DAY IN THE LIFE:

Tested out a few of the pubs in York, last night.

Decent beer and a pint for less than four quid a pint is a move in the right direction as well. And we got to visit one of the outlets of a famous local brewer to the accompaniment of various signs and notices saying ‘no mobile phones’, ‘no handheld devices’ and ‘cash only’.

Indeed, we saw some bemused tourists checking out the signs before walking away.

Maybe it was the ‘no swearing, zero tolerance’ sign that finally swung it for them but, whatever it was, it led us to question just how high up on the brewer’s list of priorities making a profit was.

Anyway, the pub wasn’t very busy. We had to ring the bell on the bar to get some attention and, within a few minutes, our party comprised 100% of the customers in the pub.

Maybe it was off the circuit as the unit has had a close and intimate relationship with the River Ouse for decades and had just reopened after flooding. Again. It’s cellar, I believe, is upstairs.

Well, it’s Friday.

We’ve made it to the end of another rather bruising week and, as it’s lighter in the mornings and the weather forecast for the weekend is halfway reasonable, that’s something to be pleased about.

So, let’s move on to the news but, before we do, can anyone name the above pub?

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PUBS & RESTAURANTS:

Industry calls to leave VAT at 12.5%.

UK Hospitality reports that a YouGov poll has found that only 17% of respondents believe that VAT on food & non-alcoholic drinks in the hospitality industry should return to 20% next month. Whilst taxpayers rarely welcome tax rises, UKH says that ‘an increase in VAT will only further fuel inflation across the nation, which is why hospitality leaders are urging Government to hold the 12.5% VAT rate levied on food, accommodation and tourism – and not raise it to 20% after the March Budget.’

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Cliff edge:

UKH says maintaining the current rate will enable hospitality businesses to recover and rebuild following the pandemic, amid a crisis of heavy debt and soaring costs. It will support operators to manage what is being described as the industry’s unfolding ‘cliff edge’ in April when, alongside the VAT rise, employment costs are set to increase, higher business rates kick in, and the rent debt enforcement moratorium ends.’

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Cost of living crisis.

The YouGov poll referenced above found that 92% of adults said their cost of living has gone up since before the pandemic. The other 8% may have been asleep. It says this resulted in ‘two thirds of those adults (67%) saying they are cutting back on meals out as a result.’ Demand, when units have opened, has not hitherto been an issue.

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The RICS yesterday said that, in addition to both house prices and the interest on the debt taken out to buy them rising, RIC members believe that rents will rise by 4.5% over the next 12 months.

Food to go market:

Lumina Intelligence reports that the food to go sector is set to reach a value of £23bn by 2025. The food to go market took a significant hit during the pandemic, but it is expected to rebound. The market recovered by 38% in 2021, on its 2020 value and is expected to increase a further 32% this year.

Food & other costs:

The National Farmers’ Union (NFU) has warned that UK food prices will rise as a result of the war in Ukraine. The union has written to the government to call for urgent action to help UK farmers produce enough food to keep supermarkets stocked and affordable. Its letter warned that disruption to food production, supply chains and the availability and affordability of food in the shops could last for years. 

Energy bills soaring for hospitality operators. Bath Pub Company managing director Joe Cussens told the MA that pubs need help with their energy bills now before it’s too late. Cussens’ bills for his four pubs have been estimated to increase by 250% in the coming months as his fixed contract comes to an end, soaring from an average of £1,600 to over £5,000.  

COMPANY NEWS:

DP Eurasia has updated on trading at its Russian operations, saying it is keeping units open but it will ‘limit any further investment’. DPEU says that ‘as stated in the Group’s market update on 4 March 2022, at this stage there has been no material disruption to the Group’s operations from the ongoing situation. Trading from its 188 stores in Russia continues and the Group remains dedicated to the communities it serves.’

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The MCA reports that Mission Mars has a new Rudy’s Pizzeria set to open in Chorlton, in June, taking the brand up to 10 sites.

Three more Starbucks stores in the Buffalo, New York, area are reported to have voted to join Starbucks Workers United.

The Cornish Bakery reports that it has expanded its senior leadership team, ‘to enable its journey towards 100 bakeries’. The company says it is ‘headhunting top-flight specialists from across the UK, as well as promoting from within the company ranks’.

LEISURE TRAVEL & HOTELS:

Data from ForwardKeys shows that the Russian invasion of Ukraine caused an immediate stall in flight bookings to Europe and domestically within Russia. Bulgaria, Croatia, Estonia, Georgia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia all saw a 30%-50% collapse in bookings. Domestic flight bookings in Russia fell by 49%.

The Angus, a £100m world-class golf resort, hotel and spa in the Angus countryside has been approved by councillors, and construction of the project will get underway this summer and is planned to open to the public in 2024.

STR reports that U.S. hotel performance decreased week on week in the week to 5 March. It says occupancy was 61.2%, down 8.2% on 2019. Room rate was up 4.7% (so well down in real terms) and REVPAR was down by 3.8%.

OTHER LEISURE:

Roman Abramovich, owner of Chelsea FC, has been sanctioned by the UK government. He is one of seven oligarchs to be hit with fresh sanctions, including asset freezes and travel bans. Chelsea FC cannot sell any more tickets for games, its merchandise shop will be closed, and it will be unable to buy or sell players on the transfer market. Chelsea can still be sold to a new owner with a special dispensation, provided Roman does not benefit financially from it.

Netflix has announced a price hike for new and existing members in the UK and Ireland, with basic and standard plans both increasing by £1 a month to £6.99 and £10.99 respectively, while the premium tier will go up by £2 to £15.99.

FINANCE & MARKETS:

The ONS has reported that UK GDP rose by 0.8% MoM in January vs. 0.2% expected. This is good news for growth, but it does put upward pressure on interest rates. The BCC says ‘while there was a strong rebound in output in January as the impact of Omicron started to ease, the figures have been pushed into the rear-view mirror by renewed domestic and global shocks, including Russia’s invasion of Ukraine.’

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The CPI in the United States rose to 7.9% in February. The number, which was in line with expectations, is nonetheless the highest since 1982. It was 7.5% in January. The Fed is expected to raise interest rates at its meeting later this month.

The ECB said yesterday that it will end its bond-buying program in Q3. This is earlier than had been previously anticipated. It left interest rates unchanged.

The RICS agrees with lenders Halifax & Nationwide that house prices in the UK hit new highs in February. It says a net balance of +79% of its members reported a rise in house prices in February, up from +74% in January. This is the highest positive balance June.

Sterling weaker at $1.3072 and €1.1882. Oil price down at $109.73. UK 10yr gilt yield up 1bp at 1.53%. World markets lower yesterday. London set to open up 42pts as at 7am.

RETAIL WITH NICK BUBB:

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