Gregg’s, wealth effect, trading, inflation, discounts, fish & chips etc.:

A DAY IN THE LIFE:

Too much excitement over the weekend. Take the FA Cup final, Eurovision and a bit of good weather, add in beer and the rest is a blur.

Anyway, whilst it’s the start of another five day week – this one jam packed with company announcements and ONS statistics – here’s another reminder that we’ve reintroduced Start the Day. It’s on the right in bold (or at the bottom if you receive the Word version of this email). It features:

• Start the Day with a Song (back after its Covid shutdown. Suggestions, especially more recent releases, welcome),

• Quotey McQuoteface (a Quote & general knowledge quiz),

• A Little Birdie Told Us (interesting stuff whispered in our shell-like – comments & contributions welcome)

On to the news:

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PUBS & RESTAURANTS:

Trading (wet sales):

CGA’s latest Drinks Recovery Tracker shows that the warm weekend last week lifted on-trade drink sales to 3% above their pre-Covid levels. That is good but has to be taken in the context of three years of rising prices and costs.

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Consumer squeeze, inflation & food costs:

A number of comments out over the weekend with the common theme being that food prices are high and rising. Former CEO of Sainsbury, Justin King, has said that the shock caused by Covid and now Ukraine could mean that high prices were here to stay. He says ‘we have been perhaps through a golden era.’ He adds ‘I suspect what we will see is a higher proportion, across the piece, spent on food for the longer term.’ UK inflation stats are out on Wednesday.

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India has banned wheat exports. It is the world’s second largest producer. This could tighten supply still further.

New that PM Boris Johnson has shelved plans to ban multibuy deals on unhealthy food in supermarkets, presumably in order to save a bit of money for the consumers. The health lobby is critical of the U-turn.

Discounting:

M&B’s Vintage Inns Pub Co chain is offering 50% off mains, Monday to Thursday. The company’s Sizzling Pub Co is offering the same deal, at least for this week.

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Fish & Chip shops:

Plenty of news over the weekend suggesting that the traditional UK fish & chip shop could be endangered by rising prices and the consumers’ inability to cope with same. Russia is responsible for much of the catch landed in the UK. There’s a ban and / or a 35% tariff being spoken of there & prices are rising. The price of cooking oil has risen as a result of the Russian invasion of Ukraine and spuds are also dearer.

Transport difficulties:

It never rains but it pours as The Telegraph runs with a story that rail strikes during the summer could threaten the delivery of all products and put further upward pressure on prices. The paper says ‘Downing Street is preparing to lock horns with union barons who are demanding double-digit percentage pay rises for their staff.’

Deliveroo union deal. The MCA has looked at the ‘historic union recognition deal’ announced by Deliveroo with the GMB and says that ‘the announcement could be viewed as some as a clever PR move.

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Responses to the cost of living crisis:

The BBC reports that Ascona Group, which owns 60 UK petrol stations, claims that fuel sales have fallen as drivers cut back on the number of journeys they make due to higher pump prices. Managing director Darren Briggs said customers were making £20 to £30 fuel purchases ‘last a little bit longer’.

Perhaps driving the above, the average cost of a litre of diesel at the pump reached 178.4p on Monday, according to government data. The new highs wipe out the chancellor’s cut in fuel duty, and mean that filling up a typical 55-litre family diesel car is around £26 more expensive than a year ago. 

Poverty campaigners say some consumers are skipping meals. The large ticket retailers are concerned that demand may be slipping. The holiday companies, meanwhile, are performing well. The supermarkets say they are ‘laser focused’ on providing value.

COMPANY NEWS:

Gregg’s Q1 update:

Gregg’s has updated on Q1 trading saying that it has generated 27.4% LFL sales growth for first 19 weeks of the year. It says it has seen ‘49 new shops opened in first 19 weeks’. It has closed 6 units and has a ‘strong pipeline.’ The group says growth will normalise at lower levels.

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McDonald’s is facing complaints from shareholders that it has broken earlier promises that it made to reduce the use of drugs in cattle slaughtered to provide it with beef. Trinity College, Cambridge, a holder of McDonald’s shares, is leading an alliance of investors including Carl Icahn.

Meanwhile, the MCA reports that McDonald’s UK & Ireland is to invest over £250m over the next four years to redesign parts of its restaurant estate to suit the rise of omnichannel ordering. It says the ‘Convenience of the Future’ upgrade programme will see McDonald’s UK&I shake up the way its restaurants operate to reflect the diverse ways customers order.

John Lewis boss Dame Sharon White has called on the government to address the cost of living crisis with the same urgency that it did the pandemic.

Costa Coffee partners with Freemans Event Partners, bringing Costa to major UK sporting events via new mobile outlets.  Stephen Freeman, CEO of Freemans Event Partners, said that the organisation would be collaborating with Costa Coffee across a number of events this year, including the Royal Cheshire Show, the Formula One British Grand Prix at Silverstone, the BMW PGA Championship and multiple fixtures at Twickenham.

The MCA reports that Popeye’s delivery kitchens are the most successful Deliveroo has ever seen on the platform. UK CEO Tom Crowley also said ‘Stratford is number one in the world. Out of 3,500 Popeyes, number one total sales in the world. We’re quite pleased with that stat.’

Jollibee Foods Corporation (JFC) reports system-wide sales grew 25.5% to $1.14bn during a strong Q1. However, JFC said inflationary pressures were a headwind across its portfolio and that it had responded by increasing prices and introducing operational efficiencies.

Wendy’s is set to open what will be its 7th site in the UK, in Ilford, later this month. The co says the store will provide customers in the area with its classic meals along with its own take on breakfast.

Asahi Super Dry is launching its ‘Beyond Expected’ advertising campaign across the UK through mediums such as TV, VOD, Audio, Digital and OOH.

Turtle Bay is to open a further site in Manchester, at Salford Quays. There are already two sites in the Manchester area.

HOLIDAYS & LEISURE TRAVEL:

The Foreign Office has clarified the requirements for passport validity after reports of passengers being wrongly turned away by airlines. The Foreign Office said ‘Your passport must be: issued less than 10 years before the date you enter the country and valid for at least 3 months after the day you plan to leave’.

Luton airport saw nearly 1.2m passengers in April, compared to just 106k passengers in April 2021. City breaks were in high demand over the Easter half-term with Amsterdam topping the list of most popular destinations, followed by Bucharest, Budapest, Warsaw and Tirana.

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Some 157,000 Britons visited Florida in the first three months of this year, making the UK the largest overseas source market.

Staycations:

Holiday park operator Parkdean Resorts has announced that it ‘is preparing for a bumper May Half Term after a spike of bookings in the last few weeks.’ It says ‘perhaps buoyed by the stunning weather over Easter, bookings for May Half Term at Parkdean Resorts’ 66 parks have skyrocketed, surging by a massive 204% since April 1st.’ it says there has been a 216% increase in web searches.

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EasyJet is reported set to offer new and existing cabin crew a £1,000 bonus at the end of the summer holiday season in order to retain and attract staff. This will, at some point, have to be reflected in fares.

OTHER LEISURE:

Elon Musk has said his Twitter deal is ‘temporarily on hold’ over the company’s spam and fake user accounts. Shares of the social media company fell 20% in premarket trading after Musk said the deal was pending ‘details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.’

FINANCE & MARKETS:

The Telegraph says ‘the housing market faces a reckoning.’ With mortgage rates rising and real incomes under pressure, this may well be true. Worryingly, the wealth effect could work in reverse. The Telegraph says prices are up by more than 10% in the last year ‘to 5.5 times the average wage – and even higher in London.’

Bank of England governor Andrew Bailey is to face MPs today in what the FT says will be ‘the toughest parliamentary grilling of a Bank of England governor since the global financial crisis.’ There is some evidence that the government has been briefing against – or at least not in favour of – the governor’s recent actions.

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The Times reports that Brexit and Covid have meant that ‘just-in-time global manufacturing supply chains have been replaced in British factories with “just-in-case” arrangements.’

The rate of unemployment in China has risen to 6.1% in April.

Sterling up at $1.2238 and €1.1765. Oil price down at $109.21. UK 10yr gilt yield up a couple of bps at 1.75%. World markets better on Friday but London set to open down around 34pts as at 6.30am.

FORTHCOMING NEWS:

Big week this week – see details in Trading Statements & Events.

We have numbers from food, drink & pub companies including Gregg’s, C&C, Britvic, M&B, Marston’s, Premier Foods & Young & Co,

We have comments from property giants British Land & Land Securities.

The ONS will update on employment and unemployment stats (Tues) and on the level of inflation (Weds) and GfK updates on consumer confidence on Friday.

YESTERDAY’S TWEETS:

Email. More stats & surveys (still not good), Adnams (AGM update), consumer spending (wobbly), Gregg’s (exec pay), EasyHotel (now > pre-Covid) & more. Today’s e/m & sign up free www.langtoncapital.co.uk. #inflation #costoflivingcrisis #hospitality

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