Intercontinental, discounting, stagflation, services output, US Q1s etc.:

A DAY IN THE LIFE:

Well, though short, this week has felt a bit longer than most.

Perhaps that’s because, in addition to zipping around London – Southwark, the City, the West End, Clerkenwell, Crystal Palace & more – there was so much mandatory football on the telly and watching same seemed best combined with hospitality site visits.

That can be wearing and, though one outlet managed to charge us £7.50 for some sort of cloudy pale ale and such carousing thus does keep the industry’s tills ringing, it might not go on forever.

Because the consumer only has so much money and, whilst the market could polarise between those feeling the pinch, big time, and those who are insulated by savings, relatively high income levels or both, overall spend is likely to come under pressure.

The tone of the news yesterday, courtesy of the Bank’s prediction of what sounds like stagflation at the end of this year – after saying that our problems were transitory for most of last – was very downbeat.

We’ve tried to keep it in perspective but some of the Press headlines maybe convey the mood. There will always be winners and, on a brighter note, the sun’s shining and it’s the weekend. Have a good one & let’s move on to the news:

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PUBS & RESTAURANTS:

Consumer recession likely?

The MPC has raised rates for the fourth meeting in a row, the first time it has done this since its independence 25yrs ago. At the same time, the Bank has said that ‘negative growth’ is likely next year. Whether or not these negative quarters are consecutive (to produce a technical recession) or not, is of little consequence.

• The Bank ‘voted by a majority of 6-3 to increase Bank Rate by 0.25 percentage points.’ It said ‘those members in the minority preferred to increase Bank Rate by 0.5 percentage points.’ That would have come as a shock. It says ‘global inflationary pressures have intensified sharply following Russia’s invasion of Ukraine. This has led to a material deterioration in the outlook for world and UK growth.’

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Aside from the above, we won’t go on and on about economics but, with the squeeze tightening and with negative headlines blaring out from all quarters, some leisure stocks yesterday took a bashing.

Disastrous Deliveroo was down 6% to a new all-time of 97.5p. Just Eat was off by 10.7%. Restaurant Group and Domino’s were both down by 7.2% and M&B was some 6.1% lower.

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Working from Home.

Or not working at all as PwC has told its accountants and other staff they can finish work at Lunchtime on Fridays over the summer, assuming they get their work done. The move comes after PwC ran a pilot of ‘summer working hours’ in July and August last year, which proved so popular that the policy has been extended by another month this summer.

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UK Services Sector:

S&P Global (was IHS Markit) has released its UK services PMI for April saying that ‘although the UK service sector remained firmly inside growth territory during April, there were signs that sustained increases in the cost of doing business and the war in Ukraine combined to limit the pace of expansion at the start of the second quarter.’ S&P says ‘in particular, new business growth slowed sharply and was the weakest in the year-to-date.’ The number came in at 58.9 in April vs 62.6 in March.

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Other news:

New Zealand wine volumes look set to rise this year after falling by 19% last.

CPL Learning is offering a free basic course in sign language to operators who may wish to get a better understanding of the challenges faced by Deaf people.

DISCOUNTING:

What’s going on?

• Pizza Express is offering 50% off to Club members until 29th of this month.

• Pizza Hut is offering all you can eat, Monday to Friday until 3pm (at some restaurants it’s 5pm) from a pizza/pasta buffet.

• M&B’s Nicholson’s chain is writing to signed up members reminding them to cash in vouchers before they expire on 11 May.

• There will be other deals out there and they do seem a little more prevalent than had been the case.

Why do this?

o Positive points:

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COMPANY NEWS:

US Q1s.

Papa Johns International has reported Q1 numbers saying that it saw 1.9% same-store sales growth for North America. It says it plans to open 1,400-1,800 new stores by 2025 with some 320 opening this year. CEO Andy Lynch says ‘January was the most difficult operating environment I’ve ever seen since I’ve been in this industry.’ He says ‘we had a lot of demand and it was really challenging.’ The company reported revenues up 6.0% to $542.7 million. Net income fell from $33.9 million during Q1 2021 to $10.5 million Q1 2022.

Shake Shack has announced Q1 numbers saying revenues were up 31% at $203.4 million. The company generated an operating profit of $29.9 million compared with a loss last year of $11.3 million.

Texas Roadhouse has reported Q1 numbers in the US saying that revenues rose by 23.3% to $987.5bn. The group generated net income of $90.1m (up 11.4%) or 108c per share. The company CEO, Jerry Morgan, says ‘we continue to be very pleased with the sales levels that are being generated thanks to the hard work of our operators. While higher costs are impacting our bottom line, we remain focused on what we can control – providing legendary food and legendary service each and every shift.’

Stonegate has launched its first ‘Chapter Collection’ premium site. The collection will feature premium food-led pubs initially in city centres, with the first to open being the Clerk & Well on Clerkenwell Road.

Bodega Bay, a London based hard seltzer brand, has announced that it has raised £1.1m from its Crowdcube campaign, exceeding its £400k initial target. This round will be used to drive growth in the UK and export markets.

200 Degrees, the Nottingham-based coffee roaster, is opening its third shop in its hometown on Monday, bringing its total estate to 17 sites.

The Guardian reports that BrewDog CEO James Watt has brought a private prosecution against a woman, accusing her of fraud and malicious communication. Watt claims Emili Ziem, 29, has provided false information about who was responsible for ‘malicious’ comments made about him on social media.

Pret A Manger global chief digital officer Sarah Venning says the company will enhance the personalisation and targeting of its loyalty scheme Pret Perks later this year.

McColl’s Retail Group has updated on its perilous situation saying ‘as previously disclosed on 25 April 2022, the Group remains in discussions regarding potential financing solutions for the business to resolve short term funding issues and create a stable platform for the business going forward.’ It adds ‘however, whilst no decision has yet been made, McColl’s confirms that unless an alternative solution can be agreed in the short term, it is increasingly likely that the Group would be placed into administration with the objective of achieving a sale of the Group to a third-party purchaser and securing the interests of creditors and employees.’ It adds ‘even if a successful outcome is achieved, it is likely to result in little or no value being attributed to the Group’s ordinary shares.’

Pistachio Holdings have acquired a further shareholding in Cream from the brand’s founders, Adam Mani and Balal Aqil. Co-investor Salonica Maroon enlarged their stake. Since the pandemic, Creams has opened more than 10 new restaurants and secured a pipeline of a further 15 sites opening in the next six months.

Asahi is aiming for 20% of its portfolio to by alcohol free by 2030.

Bloomberg’s Pret Index has suggested that transactions in the City and Canary Wharf rose last week to 88% of their pre-pandemic levels ‘indicating that office occupancy may be almost back to normal.’ That, of course, depends on how much was down to volume and how much to price.

HOLIDAYS & LEISURE TRAVEL:

InterContinental Hotels Group has reported Q1 numbers saying that REVPAR for the quarter was up 61% on last year to 82% of 2019 levels. It says that it signed 16.6k rooms in Q1 to take the system to 885k rooms globally. CEO Keith Barr says ‘we’ve seen very positive trading conditions in the first quarter with travel demand continuing to increase in almost all of our key markets around the world.’

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Knight Frank research shows that UK Hotel transaction volumes have exceeded £1.5bn in the first four months of the year, up 40% on H1 2021 investment volumes. London secured approximately £750m of hotel transactions and the UK regions attracted over £800m.

IATA reports total air passenger traffic in March 2022 was up 76% YoY, but still 41% below March 2019. IATA also cautioned that delays at airports could hit consumer ‘enthusiasm’.

Leger Shearings Group reports a record week for sales in the seven days to May 1 ahead of price increases. The coach holiday specialist saw bookings rise 11% on the previous top week for bookings achieved in January.

Booking Holidays reports a rise in Q1 revenue to  $2.69bn, compared to $1.14bn a year prior. The news sent its shares  up 7.5%.

Royal Caribbean Group has reported Q1 numbers saying that it made an operating loss of $(1.2) billion and loss per share of $(4.58). CEO Jason Liberty says ‘despite the impact of Omicron earlier in the year and the horrific conflict in Ukraine, we are encouraged by the strong demand for cruising and the steady acceleration in booking volumes.’

STR has said that the UK and Polish hotel markets have recovered most rapidly in terms of occupancy across Europe.

IATA says the pace of recovery in airline volumes is moderating. DG Willie Walsh says ‘with barriers to travel coming down in most places, we are seeing the long-expected surge in pent-up demand finally being realised.’ He adds ‘unfortunately, we are also seeing long delays at many airports with insufficient resources to handle the growing numbers.’

OTHER LEISURE:

Elon Musk is reported to have lined up 19 new investors to put money into Twitter.

Newbury Racecourse has reported full year numbers to end-December saying that turnover rose by 75% to £14.8m and the group made a marginal profit against losses of £2.4m in the prior year.

FINANCE & MARKETS:

The Bank of England yesterday raised UK rates to 1%, their highest level since 2009. The 0.25% move had been expected. The Bank says inflation has ‘intensified’ since governor Andrew Bailey said it was transitory. The Ukraine conflict has raised some prices.

The Bank of England has warned that the UK economy could shrink last year. The IMF has already said that it believes the UK will have the slowest growth in the G7 next year. The UK could have the slowest growth of all major industrialised countries bar Russia.

Inflation. The Bank says inflation will average over 10% in Q4.

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Press. Sky says ‘if there is one message from the Bank of England’s forecasts today, it is this: if things feel tough today, then just wait.’ It says, unhelpfully, ‘by the end of this year they will feel much, much tougher.’ It concedes this is ‘a deeply unpalatable message.’ City AM says ‘the UK is hurtling towards a recession sparked by households being gripped by the worst cost of living squeeze since the early 1980s.’ It says ‘the economy will shrink for most of next year, dragging the UK into a 0.25 per cent contraction in 2023 and in effect tipping the UK into a slow burning recession.’ ITV said the outlook was bleak.

The BCC says ‘the decision to raise interest rates will cause considerable alarm among households and businesses given the rapidly deteriorating economic outlook and mounting cost pressures many are facing.’ It says it is ‘vital the fiscal policy is now loosened to ease the crippling cost pressures faced by consumers and businesses.’

Sterling weaker at $1.2365 and €1.1738. Oil price higher at $111.22. UK 10yr gilt yield down 2bps at 1.96%. World markets mixed yesterday. London set to open around 24 points lower as at 6.30am.

RETAIL WITH NICK BUBB:

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