Trading, cost of living, corporate distress, delivery, premiumisation etc.:

A DAY IN THE LIFE:

We’re still out and about doing our bit for the domestic hospitality market.

So much so, in fact, that we find ourselves somewhat short of time this morning and will have to move on to the news. Just time to say that the Mighty Hull City destroyed Preston North End nil-nil at the weekend to maintain our 100% unbeaten record and push the onset of our relegation battle well into September.

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PUBS & RESTAURANTS:

Current trading:

S4 Labour reports that July hospitality sales increased by 4.7% YoY, driven by very dry and warm weather. The bounce was driven predominantly by a 12.3% uplift in drink sales, while food sales slipped 3.5% over the same period. London sales increased by 21.3%, with regional sales up by a more modest 1.7%.

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Cost of Living crisis:

The ONS reports that 16m people have cut back on food and essentials during the cost-of-living crisis, with almost half of adults who pay energy bills said it was very or somewhat difficult to afford them…

Financial stress for corporations.

Accountant Begbies has reported in its latest Red Flag Alert that three has been a 37% increase in the number of businesses in critical financial distress in Q2 this year compared with the same quarter a year ago. It reports, however, that the absolute number, at around 582,000 companies, is flat on Q1 this year.

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Colin Wilkinson, MD of the Scottish Licensed Trade Association, says that ‘the last thing businesses need just now is for the Bank of England to increase the interest rate to its highest level since December 2008.’

Commenting on lower levels of sector business confidence, UKH CEO Kate Nicholls says ‘the dwindling confidence of hospitality business leaders is concerning if unsurprising, considering the mountain of challenges the sector continues to confront.’ She says that ‘swift government action – and a commitment to measures to support hospitality from the Conservative Party Leadership contenders – is vital, to give operators the confidence to plan and invest with a degree of certainty.’

Government action:

Likely new PM Liz Truss has said she would immediately reverse the rise in National Insurance contributions if she were to beat Rishi Sunak in the race to become the next prime minister.

Gordon Brown has called on the government, when it is next able to function properly, to agree an immediate emergency budget or risk “condemning millions of vulnerable and blameless children and pensioners to a winter of dire poverty”.

Delivery:

Seattle has joined San Francisco in agreeing a 15% permanent fee cap on delivery. It says it will allow delivery firms to charge more if there are additional services provided…

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Other news:

In the US, some 66% of restaurants have experienced a drop in sales due to inflation according to data mined by company Seated…

Office working far from dead. Morgan Sindall said on Friday that workplace fit-outs helped the construction company report record results. CEO John Morgan says ‘the city is far from dead.’

Supply issues. Dockers at Felixstowe are to stage eight days of strikes over pay. With Shanghai opening up, it had been hoped that supply problems would abate.

The BBC reports Cash Action Group as saying that people are turning back to cash and away from plastic, partly as a result of the cost of living crisis…

Energy consultancy Auxilione warned that the government’s energy price cap could be increased further than previously expected, reaching nearly £4,000 a year from January. Predictions for January are still uncertain as there are more than three months left until the price is decided.

IT’S THE WAY YA SELL ‘EM…

Introduction. We’re in unprecedented times. Hence, many suggestions as to how the market could evolve could be worthy of some attention. Some have suggested that a ‘bar-bell’ or ‘hour-glass’ market could emerge with premium operators doing well and hard-discounters, presumably with permanently low margins, also performing strongly…

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COMPANY NEWS:

Diageo CEO Ivan Menezes is in the news for pay-packet reasons.

Coffee (and milk):

Costa Coffee has opened its 300th drive-thru store in the UK and committed £20m to expand its drive-thru presence in the country over the next three years.

Illycaffè reported revenue up 21% to €265m in the first 6 months of 2022, with strong performances in its key growth markets in the US and China.

Peet’s Coffee will open an outlet in the UAE by the end of the year, after a new franchising agreement was reached with Americana Restaurants.

Restaurant Brands International (RBI) reports same store sales growth of 14% in Q2, driven by the strong performance of Tim Hortons Canada, which achieved 16.7% sales growth in its native market to reach $1.56bn. Tim Hortons accounts for approximately 60% of revenue for RBI.

Oatly reports revenue up 22% in Q2, reaching $178m. The oat-milk maker is scaling its production capabilities in the US, the UK and Asia and will phase further expansion in the second half of 2022. This comes after global supply chains had disrupted production during 2021 and Q1 2022. Revenues from its Asian market increased 66% to $43.7m compared to the same period in 2021.

Red Oak and Valiant Pub Co among interested parties in a parcel of pubs that has been put on the market by Marston’s, reports Propel.

Fulham Shore is to open its latest unit, a Franco Manca in Windsor, today.

HOLIDAYS & LEISURE TRAVEL:

OAG reports that Jet2 was the only UK airline not to cancel a flight in July. In comparison, Ryanair cancelled 1.2% of its flights, easyJet 1.3%, British Airways 3.6% and Wizz Air 19.2%.

Two more unions with members employed by Network Rail have announced they will join the RMT’s strikes on 18 and 20 August. About 2,500 members of the Transport Salaried Staffs Association (TSSA) and members of the Unite union who work as electrical control room operatives will also strike.

The ONS has said that 16% of adults travelled abroad in July. It says that 38% of those travelling reported disruption. The most common problem was flight delays followed by queueing issues and waits for luggage.

FINANCE & MARKETS:

Business Secretary Kwasi Kwarteng echoes his choice of candidate’s opinion when he says has said there is “strong argument” that the Bank of England should have raised interest rates “slightly sooner” than it in fact did.

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Paul Johnson, director of the Institute for Fiscal Studies, has said that the UK’s next PM mist find billions of pounds in order to support vulnerable households and to maintain public services.

US labour stats on Friday showed the US economy adding 528,000 jobs in July, maybe as much as twice what had been expected. This is likely to maintain upward pressure on interest rates.

Sterling lower at $1.2071 and €1.1855. Oil up at $95.15. UK 10yr gilt yield up 16bps at 2.04%. World markets mixed on Friday. London set to open up around 29pts as at 6.30am.

FORTHCOMING NEWS:

The week we have half year numbers from IHG (Tues) and Deliveroo (Weds), with TUI updating on Q3 on Tuesday and Hostelworld also reporting H1 numbers. Disney’s Q2 is the same day. Coca Cola HBC H1 numbers are Thursday and Flutter and 888 both report on Friday.

RETAIL WITH NICK BUBB:

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