Current trading, labour, Comptoir, Nero, Chapel Down, Boxpark & other:

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A DAY IN THE LIFE:

Friday was a rather odd one.

I woke up about five minutes before getting-up-time and, convinced it was Saturday, I thanked the heavens that it was the weekend and that I didn’t have to get up early and then my alarm went off.

Which left me wondering for half a second or so just why I had set it on the weekend before reality set in and that was altogether a bit of a bummer but, I suppose you should always put things in perspective and, though the last working day of the week had started on a down note, everything is relative.

I wasn’t the PM having to backtrack on everything of note that I had said and done and, anyway, we got the day back on track.

The email went out but, when we took the puppy out for a walk, she leapt on and had a serious go at a pigeon, which was very much like the scene in Galaxy Quest where the cute little aliens fall on and devour one of their colleagues who’s picked up a nagging injury.

That left us a) wondering just what sort of beast we were sheltering and feeding and b) rather ineffectually doing the Fenton bit, the deer-chasing Richmond Park dog but, by then, it was rather too late and, whilst we told her off, I have never seen a less contrite dog in my life.

Enough of that, on to the news:

PUBS & RESTAURANTS:

Current trading:

CGA has released its Drinks Recovery Tracker for the week to 8 October saying that overall drink sales in the on-trade were 3% ahead of those in the same week last year…

• CGA reports that beer was up 10% with cider, soft drinks and wine up by 13%, 6% and 1% respectively. Spirits were down 13%. All of the numbers, bar perhaps beer sales, are well down in real terms. Indeed, CGA does say that ‘while double-digit inflation is wiping out real-terms growth at the moment, it does raise confidence about prospects for pubs, bars, and restaurants in the run-up to Christmas.’

• CGA’s Jonathan Jones says ‘a third week of year-on-year growth shows operators and suppliers are responding very well to all the external challenges thrown at them.’ He says ‘consumers are clearly still happy to spend time and money in pubs, bars, and restaurants, despite the pressures on their discretionary spending at the moment.’ This is true but, as real term sales are down, it is likely that volumes and the absolute numbers of customers are lower.

• CGA says ‘mounting energy, food and property bills, and turmoil in the economy, are casting a long shadow over Christmas, but we can be cautiously optimistic that the sector will show more resilience over the next couple of months.’

UKH CEO Kate Nicholls has welcomed the PM’s last but one U-turn saying ‘we now need to see government take a longer-term look at what will boost businesses and inspire confidence to invest…’

• She says ‘addressing pre-profit taxes by reforming the business rates system, which is currently not fit for purpose and places an unfair burden on hospitality businesses, and introducing a lower rate of VAT would be two galvanising actions from the government that would enable hospitality businesses to grow and also reward the consumer.’

Michael Kill, CEO of the NTIA, comments ‘the British Government has all but lost the confidence of the sector, businesses are on the verge of collapse, with many facing an uncertain future leading to the critical golden quarter…’

• He says ‘a New Chancellor will need time to get up to speed with current policy decisions, time which the Night Time Economy and Hospitality sectors do not have.’ Mr Kill adds ‘we have already seen through recent polls that under the current support package, over 70% of businesses are either barely breaking even or losing money, any delay will be critical to their survival.’ The NTIA concludes ‘the Government must not delay the upcoming budget, or they will see thousands of businesses and jobs lost before the end of the year.’

The ONS reports that the number of insolvencies in total in England & Wales in September was 1,679. This is up 16% on September 2021 and up 11% on the pre-pandemic month of September 2019.

The consumer:

Chairman of Tesco John Allan has told the BBC that consumers will face hardship as a result of the rise in interest rates. Mortgage costs for those coming off two and five year fixes with a £200k mortgage could rise by around £6,000 per annum…

• This will need to be found from after tax income and, as the energy cap has risen from £1,000 to £2,500 per annum, it will be an additional drain on resources. Mr Allan spells it out, saying ‘the reality is that the movement in interest rates is now going to lead to much higher mortgages rates for millions of people.’ He adds ‘lots of people I think are [already] struggling with the existing elements of the cost of living crisis in food and so on.’

Andrew Bailey, governor of the Bank of England, has said that interest rates may need to rise by more than previously expected…

• Mr Bailey, who previously said that inflation was transitory and that people should not push for aggressive pay rises to match it, says the Bank will not hesitate to raise rates in order to bring inflation, currently around 10%, back to 2%.

The Resolution Foundation reports that over five million households will see their annual mortgage payments rise by £5,100 a year on average between now and the end of 2024…

• The Resolution Foundation reports ‘households across Britain are currently living through an inflation-driven cost-of-living crisis as pay packets shrink and energy bills rise.’ It adds ‘with almost half of all mortgagor households on course to see their family budgets fall by at least 5% from higher payments, the living standards pain from rising interest rates will be widespread.’

While some homeowners on variable rate deals will see their costs increase immediately, the impact on the majority of mortgaged homeowners, who are on fixed-rate mortgages, will build over the coming years as they move off lower rates on to new deals, the think tank added.

The Warm This Winter pressure group says that around seven million homes in the UK could be in fuel poverty without further help this winter. It says that the Energy Price Guarantee and the £400 energy bills payment will help but it believes that more should be done.

Labour market:

The Recruitment & Employment Confederation reports that hospitality is amongst the industries that have found it most difficult to recruit (or re-recruit) staff…

• The REC reports ‘in the 25 years we have been doing Report on Jobs, which is a monthly tracking survey of recruitment, we have never seen candidate shortages as bad as they have been.’ It adds that industries that laid most staff off during the pandemic (because they weren’t allowed to open) are amongst those finding it hardes to recruit. It says’if you look at vacancies, they’re actually highest in these industries, where people weren’t allowed to spend their money during the pandemic.’

• The REC adds ‘undoubtedly, there was a huge surge in demand and as well there was this decrease in labour supply, so that means there were fewer workers to fill the jobs and there were more jobs for them to fill. This is just a perfect storm, high demand low supply, and that led to this record rise in vacancies.’

Normality at Christmas?

Tickets for London’s New Year’s Eve celebrations go on sale next Friday, the first time in three years that the city will welcome in the New Year from the banks of the Thames…

• The Mayor of London, Sadiq Khan, said ‘The celebrations are one of the biggest nights of the year for our capital’s hospitality industry and an unforgettable moment when the eyes of the world turn to our city.’

Please feel free to let us know how Christmas bookings are going. Is trading anything like ‘normal’? We’ll update thereafter.

Green issues:

A Plastic Planet’s ‘Reduce, Refill and Replace Revolution’ strategy has received cross-party backing from 24 MPs, peers and NGOs. The proposals call for the introduction of single-use plastic bans on plastic sachets, bags, pots, single-use bottles and fruit wrapping as early as 2024.

Walkers is investing £14m into sustainable packaging moves, claiming that it will remove 250 tonnes of virgin plastic from its supply chain annually.

KeepCup reports that 60% of its customers were using their KeepCups more than three times a week – up from 21% the previous year as reusable cups saw a downturn during the pandemic. Around 64% of UK consumers said they were limiting their use of single-use plastic over the last year, and 52% valued durability over recyclability.

Other news:

Israeli 3D meat printing company, Redefine Meat, has partnered with importer Giraudi Meats to drive European distribution of its ‘New Meat’ steak cuts produced on 3D printers. Redefine Meat raised $170m in a series A financing round earlier this year.

Battersea Power Station opened last Friday, with visitors now able to discover the Power Station’s Turbine Halls, which have been restored and transformed into a one-of-a-kind retail and leisure destination.

COMPANY NEWS:

Comptoir has announced Nick Ayerst as its new CEO, starting 17 October. Mr Ayerst was previously Managing Director of LEON and will take over from Mr Jean-Michel Orieux, who has been interim CEO since August 2022…

• Comptoir points out that Mr Ayerst has experience in spades. It says ‘prior to his role at LEON, Mr Ayerst spent 15 years in leadership roles at The Restaurant Group, the UK’s largest listed restaurant company, where he was a member of the TRG Executive team. Between 2013 and 2020, Mr Ayerst was Managing Director of TRG Concessions, which operates restaurants, bars and QSR outlets in airports, stations, shopping centres and Hilton Hotels, where he implemented short- and long-term growth opportunities, more than doubling revenue and profit, and oversaw the opening of 45 new sites.’

• Mr Ayerst says ‘I am joining Comptoir Group at an exciting time for the Company. The strength of the Comptoir brand, talented team and vision of the new Board to grow the business and deliver a best in class offering for its guests make this a great opportunity. I see tremendous potential for the Company to grow and capture market share and I look forward to building on Comptoir’s success.’

Caffe Nero has reported that it is launching a new partnership with Waitrose. It reports that the ‘free hot drinks offer for myWaitrose members returns’ and says that the ‘Strategic Partnership will also see Caffè Nero’s range of ‘coffee at home” products carried in Waitrose stores across the U.K. – with 20% off the normal price during November.’

BrewDog reports that its newest bar is to open in Atlanta, Georgia. James Watt says ‘located directly on the BeltLine and right next to the iconic Krog Street Market, our newest bar features an onsite brewery and 28 taps of BrewDog beers plus some amazing local beers too.’ He adds that ‘like all of our locations we share 50% of the profits with the fantastic team who work there and the bar is also carbon negative!.’

Boxpark CEO Simon Champion has told City AM that young Londoners receiving inflation-related salary boosts have helped to protect Boxpark from a slowdown in discretionary spending.

• City AM reports ‘the company has reaped the rewards of a food-delivery trend, with the pandemic resulting in more people ordering breakfast foods from Boxpark vendors than ever before. Food delivery revenue has doubled across Boxpark’s three London sites, with its Wembley venue experiencing triple growth.’

• The company believes that the upcoming World Cup was set to be “bigger and better” than ever at Boxpark, with signs that waves of Londoners have already booked the first England match day off work. “I think it will be fantastic for us,” says Mr Champion. He adds ‘going forward, [new sites] will be pretty even between London and major cities.’

Jamie Oliver’s latest restaurant, a pop-up kitchen in Archer Street, Soho, opened over the weekend.

Chapel Down has updated on its harvest, saying that ‘favourable growing conditions have enabled the delivery of both an exceptional grape quality and yield. Across its 750 acres already under vine, the Company has delivered a record tonnage of its key sparkling wine grapes, Chardonnay, Pinot Noir and Pinot Meunier, as part of a total harvest of over 2,000 tonnes….

• Chapel Down says ‘this compares favourably with last year’s, weather affected, harvest of ~1,400 tonnes. This year’s harvest is expected to enable the production of approximately 2 million bottles of high-quality sparkling and still wines.’

• The company says it ‘continues to expand its capacity, to capitalise on the growing English Sparkling wine market, which grew by 29% in 2021. The Company has planted 38 additional acres of vines this year, and expects to plant a further 118 acres in the near-term, meaning the Company will exceed 900 acres by the summer of 2023. The Company continues to look at investments to drive capacity to support its longer-term growth ambitions and, amongst other initiatives, is in active discussions to source new, high quality land for further vineyard plantings.’

• CEO Andrew Carter comments ‘our strong performance in the first half of the year and the bumper harvest we have announced today leave Chapel Down well on track to meet our target to double the size of the business by 2026.’

The Inn Collection Group acquired its second Welsh property, The Bull in Beaumaris.

Tim Hortons plans to launch 50 stores in the Queretaro region of Mexico, doubling its current footprint in the country. The $30m investment will create 1,000 new jobs and 7,500 indirect jobs over the next three years.

HOLIDAYS & LEISURE TRAVEL:

Real world issues:

Travel Weekly reports that there has been difficulty in pricing 2023 holidays, with suppliers reluctant to commit to prices far in advance amid rapidly rising costs. Operators do not want to be in a position where they may price high, and lose trade, or price low, and maybe have to ask for surcharges to be paid maybe a year down the line…

• The head of a destination management company told Travel Weekly “We’ve lots of data but it’s no good in this situation. I’m having calls with major clients saying, ‘This is the price, it might go up, it might go down, and if you don’t like it, you can go elsewhere.’”

More than 1,000 Stansted workers have agreed a new pay offer with the airport, staving off potential strike action. The offer of a 10% increase plus an additional £250 payment was accepted by workers. Lowest paid workers were offered an 11% raise over the year.

OTHER LEISURE:

A court filing made public on Thursday showed that Elon Musk is under a federal investigation related to his $44bn takeover of Twitter. The filing did not say what the focus of the investigation was, or which federal authorities were investigating.

HMRC has filed another winding-up petition against Southend United, scheduled to be heard in the High Court on 9 November. In a prior response, Southend stated that they wanted to ‘discharge the HMRC debt in full’.

ITV is reported to be mulling the possible sale of its production arm. The company may sell ITV Studios, one of the largest content producers in Europe.

FINANCE & MARKETS:

Responding to PM Liz Truss’s last but one U-turn (the decision not to reverse the rise in Corporation Tax), the British Chambers of Commerce says ‘the Prime Minister was right to take some action now. We have been calling for the Government to urgently address market volatility, return stability to the economy and give business some certainty to plan.’

• Stability is necessary but not sufficient to promote growth. Tony Danker, CBI Director-General, comments on the same U-turn saying ‘the instability of recent weeks has paused investment and hit livelihoods, so it was important today that the Government responded to those market concerns…’

• He says ‘in the weeks to come, government plans will need to continue to restore fiscal credibility to give markets and business confidence to invest.’ Mr Danker adds ‘once stability is restored, we must plan for economic growth from 2023. That will be the moment to set out a new long term tax regime that will kickstart business investment and ensure the UK is competitive in a changing world.’

• Since the CBI’s comments, new chancellor, Jeremy Hunt, has said that the 1p cut in the basic rate of income tax will now no longer go ahead. He says that spending will have to be trimmed. Having previously said that she would ‘absolutely not’ cut spending at PMQ, PM Liz Truss had alluded to cuts when speaking on Friday. Despite personnel changes, back bench disquiet, bad polling numbers and the scrapping of Trussonomics, chancellor Mr Hunt told the BBC’s Laura Kuenssberg that the PM is still in overall charge.

• The PM and her new chancellor reportedly held emergency talks at Chequers yesterday.

The Bank of England has halted its purchase of UK government bonds having bought £19.3bn worth. When this is ultimately sold back into the market, it is likely to depress gilt prices and raise yields.

The Chancellor, Jeremy Hunt, is reported set ‘to fast track many billions of pounds worth of tax and spending measures from his debt plan, announcing them a fortnight earlier than expected’ per the BBC. The plans will be outlined later today.

Panmure Gordon reports that 10yrs worth of house price growth is likely to be wiped out due to the depressing impact of higher interest rates on the value of the UK’s housing stock…

• PG is looking for a drop of perhaps 14% in nominal terms over the next three years. This, given that inflation is currently near double figures and could remain high for some time, equates to around 29% in real terms. PG says ‘the UK housing market faces up to its biggest challenge since the global financial crisis and arguably, given that the huge monetary easing that took place during that period is unlikely to be repeated, the coming years look more similar to the challenges of the early 1990s.’

Sterling down since Friday but steadier in the Far East at $1.1236 and €1.1527. Oil down at $92.38. Sterling 10yr gilt yield up 19bps since Friday at 4.37%. World markets mixed to lower on Friday and London set to open down around 21pts as at 6.30am.

The EY Item Club has reported that the UK will enter (or has entered) a recession that will last until next summer. It says that rising inflation and higher interest rates have pushed GDP into reverse.

• The EY Item Club says ‘there’s no doubt the UK economy faces a difficult period ahead, with global headwinds adding to domestic pressures.’ It adds that market chaos following Ms Truss & Mr Kwarteng’s disastrous mini-budget may prolong the problem.

There are some concerns that an unwind of the high levels of stocks built up to protect against delivery problems during Covid could depress GDP. GDP has/had effectively been brought forward into 2020 and 2021. A ‘hit’ of around 0.8% could be registered by 2024.

RETAIL WITH NICK BUBB:

• Nick is taking a well-earned break. Back on 19 Oct.