World Cup, Christmas, Compass Group, Disney, the consumer & more:

A DAY IN THE LIFE:

Given the weather over the last week or so, it’s hardly surprising that the River Ouse has breached its banks again up here in York.

Indeed, if any of the reservoirs out there reading this email would like any water, there’s plenty here  that they can have though, given it’s the colour of strong coffee at the moment, it might need a bit of cleaning up.

Anyway, with World Cup matches driving decisions as to when and where business meetings take place, it’s time to move on to another working week. With many of us hoping that our income this year might just be a quid less than David Beckham’s, here’s the news:

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PUBS & RESTAURANTS:

World Cup.

With the World Cup starting yesterday and England playing its first game later today, CGA has reminded readers that ‘major sporting events have always had a major influence on drinks consumption and consumer behaviour in the On Premise.’ CGA says ‘in 2022, a third (33%) of consumers are watching sports in the On Premise, with a similar proportion (32%) doing so at least once a week, and one in seven (14%) visiting to watch the major crowd-pulling events. It adds that ‘football is by far the most popular sport, with more than two thirds (69%) of sports consumers watching it in pubs and bars this year…’

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The consumer:

The Institute for Fiscal Studies says that that the upcoming drop in living standards will be the “biggest fall in living memory.” He says “Middle England is set for a shock”. The IFS’s Paul Johnson says the economic situation has been made worse by a series of “economic own goals” by the government including Brexit and the disastrous Truss administration mini-Budget…

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Access to labour:

The CBI will call later today for a changed approach to immigration and the chancellor has said the government would ask more than 600,000 further people on universal credit to meet a “work coach” to help them potentially increase the number of hours that they work…

Cost of labour.

Hospitality operators have to keep an eye on salaries and perks being paid by competitors (for labour at least) outside the sector. Tesco is offering its workforce advances in their pay to help them navigate key debt deadlines. Around 280,000 staff can now opt to receive  25% of their contractual pay early under the scheme, paying a £1.49 fee per advance to Tesco’s employee benefits partner Salary Finance.

Christmas:

The BBPA reports that pubs have suffered from a drop in Christmas bookings this year and says that it is largely due to people increasingly working from home. Larger companies reporting recently have suggested that Christmas bookings remain strong. We have heard from Young’s and Fullers and will hear from Marston’s, M&B, Loungers & others in the coming couple of weeks…

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Surveys:

Corporate advisory specialist Mazars says that the hospitality sector is facing a “toxic mix” of headwinds such as higher labour and energy costs and a slowdown in consumer spending. It says it expects this is behind the rise in sector insolvencies…

Lloyds Bank has commented on business trading in the UK as a whole, saying that 12 out of the 14 sectors that it tracks ‘experienced a fall in output in October, up from nine in September.’ It says that ‘rising inflation weighed on demand, with 13 out of 14 sectors recording a fall in new orders.’

Lloyds says that ‘UK staffing levels rose at the slowest rate in 20 months, as firms navigated a competitive labour market and reconsidered recruitment plans in the face of falling demand.’ it says ‘the number of UK sectors experiencing falling output was at its highest level in 29 months in October, as demand for goods and services decreased.’

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Market size.

The  Lumina Intelligence UK Restaurant Market Report 2022 shows that  the total restaurant market is forecast to recover to 94.1% of its 2019 market value in sales terms in 2022. The current cost of living crisis has led to many customers ‘trading out’ of the restaurant market to source food at competitors in fast food and retail. The report suggests that operators should be prioritising value-led messaging and promotions that include key day-parts and offers that encourage both food and drink purchases…

COMPASS GROUP – FULL YEAR NUMBERS:

Compass Group has reported full year numbers and our comments are set out below:

Revenue, costs, profitability: Compass Group has reported ‘record net new business which accelerated through the year.’ It says that revenue was up 37.5% at £25.8bn at the headline level with adjusted operating profit of £1.59bn against £848m last year. The company reports EPS of 63.0p against 30.9p last year and the annual dividend is 31.5p against 14.0p in 2021. CPG says ‘underlying operating margin improved by 170bps year on year to 6.2%, with H2 2022 at 6.5%’. It says it has seen ‘excellent net new business of 7.5% (5.7% rebased to 2019, above historical rate of 3%)’. Client retention is up 100bps year on year and it says that the ‘first-time outsourcing market remains buoyant, accounting for c.45% of new business wins.’

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COMPANY NEWS:

The MCA reports MEATliquor has closed its Boxpark Croydon restaurant after six years of trading. The restaurant group continues to operate popular venues in London in Oxford Circus, East Dulwich, Queensway, Shoreditch, Bloomsbury, Battersea and Islington as well as in Leeds and Brighton.

AMT Coffee Ltd entered administration, with 18 sites to close with immediate effect and 22 sites sold to SSP Group. The sites transferred as part of the deal will continue to trade under the AMT Coffee brand name. Around 200 employees will also transfer across to SSP. AMT operates sites at airports, rail hubs, hospitals and other locations across the UK and Ireland…

Popeyes is opening a site in Liverpool on 26 November, with CEO Tom Crowley saying ‘We’re excited to be kicking off our North West expansion in the heart of Liverpool…We had fans travel from Liverpool to our Stratford opening, so we know Liverpool residents will be excited’.

Leeds-based brewery and bar group, North, has sold its original brewery site at Taverner’s Walk, Sheepscar to Tartarus Beers for an undisclosed sum. North has now moved all its beer production to Springwell.

Chinese start-up Cotti Coffee, founded by two former Luckin Coffee executives, reportedly has over 1,000 sites in its pipeline, despite commencing trading from its first site only last month. Cotti Coffee plans to reach 10,000 stores by the end of 2025.

Café chain Megan’s, which operates 18 sites across London and the Home Counties, has secured funding from Barclays Bank in order to fund expansion. Barclays says it is ‘excited to support Megan’s in its next stage in growth.’

HOLIDAYS & LEISURE TRAVEL:

A MMGY Travel Intelligence survey shows that UK travellers are planning 2.5 international trips on average over the next 12 months and expect to spend more than £4,000 in total for international holidays. Europe is the most popular choice for travel over the next three years, followed by the US, the Caribbean and Canada.

Travel Weekly reports that tour operators are seeing increasingly positive sales levels with one even predicting growth during economic recession. However, Elegant Resorts MD Lisa Fitzell cautioned that it could ‘be a different story after Christmas’.

The PCS union, whose members include Border Force staff, are due to take industrial action in a dispute over pay and pensions. The action will start in mid-December and will last for a month. Christmas travel could be impacted.

OTHER LEISURE:

Qatar has ruled that alcohol will not be sold to fans at the World Cup’s eight stadiums, marking a change in stance in the days immediately before the start of the tournament. On the other hand, those in corporate areas of stadiums at the tournament will still be able to purchase alcohol.

Elon Musk has said that Twitter will allow Donald Trump back onto the platform after a Twitter Poll found that a majority of 52:48 believed this to be the right move. Former president Trump, albeit before the ban was lifted, said he does not want to move back.

Flutter reports that British punters are set to stake £300m during the World Cup, making it the biggest betting event of the year. Flutter is also banking on a wider international reach, with surges expected in Australia, as well as the USA.

Former boss Bob Iger is to once again take over the reins at Disney. The company’s shares have fallen by some 40% this year. Chair Susan Arnold says Mr Iger is “uniquely situated” to take Disney through “an increasingly complex period of industry transformation.”

FINANCE & MARKETS:

The CEBR reports ‘the UK economy is slipping into recession. Our own numbers are not very far apart from the OBR’s forecast of minus 1.4% GDP growth next year. Yet, driven by the Federal Reserve Bank, interest rates are still rising around the world and it will be hard for the UK to reverse that trend for a few more months at least.’

The CBI has said that the autumn statement should have averted a deeper recession but it says it ‘fails to solve [the] fundamental UK growth problem’…

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YouGov reports that just 32% of British voters now think it was right to leave the EU. Some 56% say it was a mistake with 12% saying they didn’t know what to think.

Bank of England governor Andrew Bailey has told MPs that the UK’s economy is performing considerably worse than those in the eurozone or US. MPs on the Treasury select committee have been told that Brexit has added six percentage points to food inflation.

The OBR believes that house prices in the UK will fall by 9% over the next two years. Depending on what inflation is over the same period, the real drop will be somewhat more significant.

The IFS says ‘very clearly, Brexit was an economic own goal … economically speaking that has been very bad news indeed and continues to be bad news, particularly the way that we’ve done it, the hard type of Brexit we’ve had, distancing ourselves from the single market…’

Sterling mixed at $1.1829 and €1.1506. Oil lower at $87.09. UK 10yr gilt yield up 5bps at 3.24%. World markets mixed to better on Friday but Far East lower in Monday trade & London set to open down around 15pts as at 6.30am.

THE AQUIS MARKET:

Broker VSA Capital is hosting an Aquis Day on Tues 29 November at the Royal College of Surgeons (38-43 Lincoln’s Inn Fields, London, WC1A 3PE). The event will feature around 20 companies, who will present to attendants and take part in a competition to win the ‘Britain’s Got Aquis’ title. Judges on the day will include Andy Brough (Schroders) and Judith Mackenzie of Downing LLP. Tickets and details are available HERE

https://www.eventbrite.co.uk/e/the-vsa-capital-aquis-showcase-event-tickets-430890363677?aff=odeimcmailchimp&mc_eid=cfe56acbe0&mc_cid=cd83de005f

Attendance costs £20 – but Langton has a number of complimentary tickets and we’re open to suggestions as to who we should give them to…. Drop us a line.

RETAIL WITH NICK BUBB:

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