New capacity, inflation, WFH, food-to-go, flight cancellations etc.:

A DAY IN THE LIFE:

So, in response to our question ‘what kind of bird would you like to be’ we had a range of answers.

We had cranes (elegant with nice legs), penguins (‘I like the seaside’), albatrosses (‘I like to travel’ – the same person, disqualified) and seagulls (‘I like chips & ice-cream & depositing same in digested form on shiny black Beemers). The latter was a late entry from Langton itself but we had zero votes for magpies as a diet of sewage and carrion just didn’t seem to punch anybody’s clock.

Understandable, of course.

Anyway, welcome to a new tax year. At least we can tear up all those ‘jobs to do’ notes that we should have addressed pre 5 April and, as Stalin said, no person, no problem. On to the news:

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PUBS & RESTAURANTS:

Service sector output:

Markit has reported that ‘UK service providers signalled an exceptionally strong increase in business activity during March and the rate of expansion accelerated to its fastest for 10 months.’ It says that, following the slowdown caused by Omicron, three was a ‘sharp rebound in customer demand.’ The Markit number, where any figure over 50.0 signifies expansion, rose from 60.5 in February to 62.6 in March.

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Inflation:

Re inflation, Markit says it saw the sharpest upward moves ‘since the index began in July 1996.’ It says that ‘the latest rise in staffing numbers was the fastest since October 2021. Survey respondents suggested that tight labour market conditions had made it difficult to fill vacancies and pushed up starting salaries.’ Both of these findings could weigh on the Bank of England when it decides what to do on interest rates when its MPC next meets. Interest rates, as always, are a blunt instrument. You might subdue Peter by bashing Paul.

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Cost of living:

Pushed off the front pages by Ukraine, the cost of living crisis has not gone away. National insurance costs for millions of employees and hundreds of thousands of employers go up from today. Sky says petrol costs hit a record high on 22 March. The duty cut should have helped a little. But Sky concludes that ‘t cost of filling a family car with petrol was a third higher in March than it was a year ago, while a diesel car cost 40% more – and the chancellor’s 5p fuel duty cut has done little to help.’

Calorie labelling:

Operators are now required to give calory details on menus. BBPA CEO Emma McClarkin says ‘since being announced there has not been sufficient time or guidance given to help businesses prepare for the changes to menus. This is why we called for a delay in their implementation to give pubs some much-needed breathing space in the early stages of their recovery.’

WFH:

S&P says that it has picked up ‘stronger demand arising from the return to offices, alongside a resurgence in the travel, leisure and entertainment sectors.’ It adds ‘the near-term growth outlook weakened in March, with optimism dropping to its lowest since October 2020 as the war in Ukraine and global inflation concerns took a considerable toll on business sentiment.’

Pret has updated via its Bloomberg Index. It says that travel has picked up but there has been a ‘slight pull back’ in The City and Canary Wharf. It put this weakness down to a pick up in levels of travel and the breaking of routines. The weather didn’t help, either.

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YouGov looks at the travel and tourism industry with reference to Gen Z and Millennial demand. It produces a picture similar to that seen elsewhere in hospitality. Younger consumers seem more willing than their older peers to return to ‘normal’. YouGov says ‘people are feeling the wanderlust this year, especially younger people in the UK. How far they’ll travel is key here; Gen Z and Millennial demand for domestic holidays trails that of the rest of the country (48% vs. 52% of all UK adults in March 2022), younger consumers are 11-points more likely to say they plan to travel abroad over the next 12 months (54% vs. 43%).’

Food to go:

Lumina reports that the UK food to go market grew +38% in 2021. It says it has recovered to 76% of its 2019 market value and adds ‘this follows a steep decline in 2020, as a result of the coronavirus pandemic.’ Definitions are important here as delivery has grown. Lumina says it expects the market to ‘grow a further +32%, which sees it match and exceed its 2019 pre-pandemic value – reaching a value of £21.3bn. Beyond 2022, food to growth is set to stabilise, with the market reaching a value of £23bn in 2025.’

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COMPANY NEWS:

Private companies:

Unlisted bar company Albion & East has reported results for the year to 29 June 2021 to Companies’ House saying that revenues in the covid-impacted year fell from £5.0m to £3.7m with a loss before tax reduced from £702k to £124k). The company has accumulated losses since incorporation of £4.9m with positive shareholders’ funds of £4.8m.

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New openings:

The MCA reports that Brasserie Bar Co is ‘now “exceptionally well capitalised” and ready to exploit opportunities for growth following its acquisition by Alchemy.’ The company sits alongside a growing number of other operators looking to put on capacity.

Wagamama has announced the reopening of all its airport restaurants to meet what it has called “huge demand”. In the short term, increased linger time at airports (due to the delays and cancellations outlined below) will be good for F&B operators.

Happy Face Pizza is to open its third restaurant, to be located in northwest London, later this month.

SSP is to open a Whiskey Bread Bar in Dublin airport.

Mindful Chef is reported to be working with Waitrose to move into the chilled prepared meal market.

HOLIDAYS & LEISURE TRAVEL:

Flight cancellations:

Getting back up to speed is proving to be problematic. Fight data company Cirium has reported that some 1,143 flights were cancelled to and from the UK last week. It says that as many as 382 were cancelled over the weekend. BA cancellations in the week were 25x the level of cancellations in 2019.

The Airport Operators Association has warned passengers using UK airports to expect longer queues during peak periods over the next few weeks. The AOA says ‘now UK travel restrictions have been removed, airports cannot wait to see passengers return in volume.’ Good stuff but the reopening has coincided with an upsurge in Covid infections and a consequent increase in absenteeism.

Manchester airport MD Karen Smart is to leave the business. Her departure follows weeks of delays at the airport, the most recent due to baggage handling staff shortages. There were reports of delayed passengers missing their flights with airlines unwilling to give refunds if missing the departure was the fault of the airport.

Virgin Atlantic has said that it should return to profit next year. Losses should be ‘significantly’ lower this year. For 2021, the company reports losses down by £378 million to £486 million. The company says ‘the results reflect an intensely challenging year for Virgin Atlantic in 2021 and the continuation of the immense challenges the airline industry faced due to the Covid-19 pandemic.’

Parkdean is to spend some £140m on refurbishing its sites across the country. CEO Steve Richards says ‘by investing in our parks, we’re not only improving the guest experience, we’re also ensuring that holidaymakers keep coming back year after year, spending money in local shops, attractions, pubs and restaurants, and supporting the communities that rely so heavily on tourism.’

Hotstats reports on the global hotel industry saying ‘February was a stronger month all around’ but it adds that ‘escalating line item expenses could derail what’s already a fragile profit rebound.’

Travelodge has announced it is to upgrade its core brand product following the success of the group’s Travelodge PLUS format. Travelodge says it is ‘evolving by launching a new budget-luxe premium look and feel hotel design whilst maintaining our great value price proposition.’

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Parkdean Resorts has extended its partnership with the Royal Navy and Royal Marines Charity. It will offer free accommodation and entertainment passes to the families of some serving in the armed forces.

OTHER LEISURE:

Elon Musk has joined the board of Twitter after his recent purchase of shares made him the largest single shareholder.

FINANCE & MARKETS:

The SMMT reports that UK car production in March was the lowest in 24yrs. SMMT CEO Mike Hawes describes the numbers as “deeply disappointing.” He says ‘while demand remains robust, this decline illustrates the severity of the global semiconductor shortage, as manufacturers strive to deliver the latest, lowest emission vehicles to eagerly awaiting customers.’

Sterling mixed at $1.3067 and €1.1989. Oil price slightly higher at $106.88. UK 10yr gilt yield up 10bps at 1.67%. World markets broadly lower yesterday with London set to open little-changed as at 7am.

RETAIL WITH NICK BUBB:

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