More on JDW, costs, Budget lobbying, trading, Chipotle, Parkdean & other:

A DAY IN THE LIFE:

We had quite a few meetings last week.

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So that’s a two-one victory for the good stuff in my book and therefore steady as she goes. We’re not talking about Hull City at the moment. On to the news:

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JD WETHERSPOON – H1 WEBCAST:

Following the release of its H1 numbers, JD Wetherspoon hosted a webcast for analysts and our comments on the statement & some of the questions are set out below:

Results, cash-flow, debt & balance sheet:

• See also earlier Flash Note. Hotels did well – they are located outside city centres. Pub margins are down between 2020 and 2022 due to increased costs.

• The co reiterates that it is fully-staffed. Retention has improved. Just over a third of sales comprise food. Bar is stable at 61%. Co believes around two thirds of visits are driven by food.

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PUBS & RESTAURANTS:

Rising costs:

The British Institute of Innkeeping has reported that ‘devastating energy cost increases and soaring inflation threaten [the] survival of UK pubs.’

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On a similar theme, the FT reports that Admiral Taverns’ 1,600 pubs ‘have survived Brexit-induced labour shortages and months of closure during the pandemic. But it’s the struggle to find an electricity and gas supplier that may switch off the lights of some pubs for good.’

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Sky News quotes Michael Oakes, Dairy Board chairman for the National Farmers’ Union, as saying that food price rises are inevitable.

Financial journalist Martin Lewis, founder of the Money Saving Expert website, has told the BBC that fuel and energy price rises are “catastrophic” and causing “absolute panic” in British consumers. He says he is “virtually out of tools to help people” and called on the government to step in.

Meanwhile, debt charity StepChange has reported that one in five people think they will go into debt this year and won’t be able to pay it back. The charity says the government needs to increase benefits by at least 7% in April to match inflation.

Calls for more help:

The MA points out that trade bodies are using the two-year anniversary of PM Boris Johnson telling consumers to avoid pubs as an occasion to call on the Government to provide further financial help to the sector.

Current trading:

CGA reports that drink sales were just 1% off pre-COVID-19 in the week to 12 March. However, CGA managing director, Jonathan Jones, warned that ‘with costs rising fast and many consumers now seeing their disposable incomes fall, it is increasingly tough to achieve real-terms growth.’

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Lumina Intelligence’s Eating and Drinking Out Panel shows that lunch saw the largest day-part share growth of +1.2ppts over the four weeks to 20 February 2022.

Consumers have been drawn towards the spirits segment in recent months, with CGA senior client manager, Tom Quinn, saying ‘Spirits on the quarter this year have bounced back seeing an uplift in sales vs two year ago with volume growing by 5.7% and value by 9.9%’ however, ‘From a more long-term point of view, recovery on the moving annual (MAT) total for spirits has fallen very much behind figures seen two years ago’.

Business rates:

A new report, issued by the All-Party Parliamentary Beer Group of MPs has called on the Government to ‘urgently address the business rate iniquity which is threatening the future of pubs and their communities while online giants continue to swerve the taxman.’

Other news:

The Oxford Partnership says that Saint Patrick’s Day ‘proved to be a major boost for the UK’s hospitality sector with 1.5 million pints of the black stuff sold, which is 400,000 extra pints versus 2019. It has been two years since pubs could benefit from St Patrick’s Day sales, so social media was filled with lots of bar staff donning their best Ireland-inspired outfits.’

The Hospitality Professionals Association has appointed Bob Silk as its new chairman.

COMPANY NEWS:

Nestlé reports that coffee products, including Nescafé, Starbucks, Nespresso, and Milo plant-based beverages, achieved sales of $25.7bn in 2021, representing 27.5% of the company’s total sales. By product category, coffee was the largest contributor to organic growth. 

Tim Hortons is set to open its first site in India this year, with debut stores located in New Delhi and Punjab state. The entrance to the Indian market will be done by form of joint venture, with the entity being owned by Apparel Group, and investment manager, Gateway Partners.

Chipotle Mexican Grill has reported rather dated 31 Dec 2020 accounts to Companies’ House. The accounts, signed on 14 March this year, show losses rising from £4.4m to £6.4m.

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Getir has raised  nearly $800mn in new funds at a valuation of $11.8bn, more than both Deliveroo and Just Eat. The news contrasts Deliveroo’s performance over the last year, which has seen its stock price fall by almost two-thirds since its rocky debut last March.

Big Hospitality reports that Cubitt House is plotting an ‘aggressive plan of growth’ with three more openings slated for this year and another three expected in 2023. Cubitt House has already launched its first new acquisition of the year, The Builders Arms in Chelsea; and next week will open its second new venue, The Princess Royal in Notting Hill. 

TM Lewin is reportedly on the verge of administration as it considers lining up advisers to handle the process. Interpath Advisory is rumoured to be the firm appointed to handle the insolvency process.

McDonald’s is reported to be encountering difficulties in persuading its Russian franchisee to shut down its operations in the country.

Burger & Lobster has called ‘for leading London restaurants to unite to provide employment for Ukrainian refugees seeking work as they arrive in the UK.’

HOLIDAYS & LEISURE TRAVEL:

P&O is facing a potential travel trade boycott after the company sacked 800 seafarers and replaced them with cheaper foreign labour. Sutton Travel tweeted ‘Sutton Travel have now put P&O Ferries on a stop sale and won’t be selling their products until further notice.’ EasyJet reacted by adding fast-track applications for UK cabin crew roles for P&O Ferries employees.

Data from the Business Travel Association shows that corporate travel trips fell by 49.64% in the second week of March compared to the same period in pre-pandemic 2019. This compared to a reduction of 42.44% in the first week of the month.

German authorities are reported to be investigating deals whereby the bulk of the stake in TUI held by Russian oligarch Alexei Mordashov, who has been sanctioned, was transferred to a body controlled by his wife, Marina Mordashova.

The Times reports that the ‘American private equity giant behind Bourne Leisure [Blackstone] is mulling a bid for one of Britain’s biggest holiday park groups.’ It says Blackstone is working with investment bankers on a bid for Parkdean Resorts.

OTHER LEISURE:

Sony Pictures Entertainment and UK-headquartered Merlin Entertainments has agreed a deal to bring Jumanji to  the real world in a global deal to open themed attractions, rides, hotel rooms and retail outlets across Europe and North America.

Figures from the Association of Leading Visitor Attractions (ALVA) show that visitor numbers at Britain’s museums, galleries, zoos, castles and country houses increased by 25% last year, but are still down 57% on pre-pandemic levels. The ALVA said its sites had a total of 67.8m visits in 2021, up from 45.4m the previous year, but still significantly down on 2019’s 156.6m.

FINANCE & MARKETS:

The Public Accounts Committee of MPs has concluded that it is uncertain whether any free trade agreements negotiated by the government will have any “actual economic benefits.”

Sterling higher at $1.3153 and €1.191. Oil price up at $111.52. UK 10yr gilt yield down 7bps at 1.50%. World markets broadly higher on Friday but London set to open a shade down, around 2pts, as at 7am.

RETAIL WITH NICK BUBB: