Confidence, trains, GDP, Airbnb, Molson, Wendy’s & other:

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A DAY IN THE LIFE:

Pattern recognition is deeply embedded in us.

We see things that aren’t there (false positives) far more often than we actually miss things. And this isn’t a comment on the Lucy Letby case but pattern recognition can lead to errors whereby, for example, we mistake luck for genius or arrogance for smarts.

Indeed, the answer to most questions when asked what or why is ‘it’s complicated’ but that just doesn’t cut it with a human audience.

And many truisms, ‘too many cooks spoil the broth’ and ‘the early bird catches the worm’ have exact opposites such as ‘many hands make light work’ and the other one, whatever the advice is you should give the worm to avoid becoming avian breakfast.

And ‘fortune may favour the brave’ but it’s sensible to ‘look before you leap’. You maybe should seize the day but a stitch in time, saves nine, the tortoise beat the hare etc etc.

Anyway, it’s complicated but, on another completely random subject, now that the latest Foodservice Price Index confirms that the price of fish is falling, do you think all the chippies out there are sharpening their pencils to reduce prices?

Hint, no.

Have a good weekend and let’s move on to the news:

PUBS & RESTAURANTS:

(Rich) consumer confidence:

Data from Saltus Wealth Index suggests that confidence in the UK economy across high net worth individuals has fallen sharply since Labour took power. That may not be a shock to many. City AM points out that the Index nonetheless found that some 48% of high net worth individuals had confidence in the economy, down from 84% in August…

• Most individuals expect further tax-raising measures. This may spill over into consumption, at least at the top end of the market. Mike Stimpson, a partner at Saltus, says this represents ‘a missed opportunity for the new Government’. He says that ‘confidence is a critical component in growth, and the fact that this vitally important group of people feel that the UK economy is not on the right track is a cause for concern.’ Of the 36% of the sample that voted Labour, Saltus finds that, since news on changes to inheritance tax and the imposition of VAT on private school fees has come out, some two thirds regret their decision.

More general confidence levels:

Lumina reports that consumers may reduce the number of times they eat out or opt for lower-ticket choices as consumer confidence has slipped. Lumina Intelligence reports that consumer confidence fell to minus 22 in January….

• Looking for common themes across restaurants that have performed well recently, Lumina comments value-conscious operators and adds that loyalty schemes seem to have paid off. Lumina says that some companies are looking more actively overseas for growth. Additionally, it forecasts further consolidation across the industry in the home market.

Train strikes:

A bit like painting the Forth Bridge. City AM reports that train drivers on London’s Elizabeth Line will stage a series of strikes over the next month in a dispute over pay. ASLEF has announced that drivers will walk out on 27 February, and on the 1st, 8th and 10th of March for 24 hours….

• ASLEF says ‘our members have been instrumental in the success of the Elizabeth line – it’s a partnership, in practice, between the company and its employees – but, despite our best efforts, MTR has decided not to recognise the input, the importance, and the value of train drivers in this success.’ Hospitality operators will say something rather different.

• Meanwhile, a bit of good news in that rail union, ‘RMT has suspended strike action by Avanti train managers for the next three Sundays to allow for intensive negotiations in the long-running dispute over rest day working.’ General secretary Mick Lynch says ‘strike action has been suspended to allow space for constructive talks.’

GDP:

UKH points out that ‘food and drink was the largest contributor to growth in consumer-facing services in December 2024.’ This follows on from a major contribution in November but the momentum could be lost as a result of tax and NMW changes upcoming in April…

• UKH CEO Kate Nicholls says ‚we’ve seen over the past few months that hospitality is delivering reliable economic growth, despite the challenging economic circumstances the sector continues to face.’ She adds ‘hospitality’s resilient growth is something the Government should be backing, but instead it is stunting the sector’s potential by inflicting such damaging costs on businesses.’

Other news:

DIY coffee. Australian appliance manufacturer Breville Group has reported strong coffee machine sales globally…

• This may be due to increased global demand for coffee or due to consumers seeking a cheaper option than their local coffee shop. Or both. The World Coffee Portal reports that Breville, which trades as Sage in Europe, achieved 10.1% year-on-year sales growth in the six months ending 31 December 2024.

Valentine’s Day. Dojo has reported that bookings for tables of two are up 15% this Valentine’s Day compared to the same occasion last year. Dojo says ‘this will be a welcome boost for hospitality venues, which are feeling the pressure of rising costs, particularly following last year’s Chancellor’s Budget…..’

• Well, they’re not feeling it yet because the measures do not impact until 1 April. However, the boost will nonetheless be welcome as operators attempt to lay down a little fat ahead of what may be leaner times.

Water costs: UKH points out that costs are an issue but adds ‘there’s one cost hiding in plain sight that too many operators are still overlooking – water waste.’ It says that the hospitality sector is one of the UK’s biggest users of water and adds that leaks are easy to ignore and costly to finance.

Straws in the wind. Denny’s Corp in the US has suggested that consumer spending tailed off towards the end of Q4. The company told analysts ‘we are a bit disappointed that trends have since softened to start 2025.’

COMPANY NEWS:

Greene King Pub Partners is to extend its franchised pub model to Scotland for the first time when it rolls out its Hive Pubs and Nest Pubs offer, likely in April this year.

Overseas majors:

Molson Coors yesterday reported Q4 numbers saying that Q4 sales were down 2.0% and FY sales were down 0.6%. That’s an unhealthy exit rate…

• The company reports that ‘Full Year Income before Income Taxes Improved 20.0%’ and ‘Full Year EPS Grew 22.4% to $5.35’. Underlying EPS, however, was up a lesser 9.8%. In Q4, ‘income before income taxes decreased 0.9% in constant currency to $341.0 million.’

• The company says ‘2024 marks our third consecutive year of bottom-line growth for Molson Coors.’ It says that its ‘EMEA&APAC segment performed strongly as did Canada…while the U.S. was challenged given the macroeconomic environment.’

Wendy’s similarly reported Q4 numbers saying that systemwide ‘sales grew 5.4% in the fourth quarter, reaching $3.7 billion.’ LFL Q4 growth was 4.3%. Q4 represents an acceleration as the company says ‘for the full year systemwide sales grew 3.1%, reaching $14.5 billion, including same-restaurant sales growth of 1.5%….’

• The company points out that 2024 was the group’s 14th consecutive year of same-restaurant sales growth. CEO Kirk Tanner says ‘we are well positioned to accelerate growth, and we have a clear roadmap for Wendy’s future.’

Treasury Wine Estates reports Q2 and half-year numbers saying that net profits jumped 33% to AU$239.6 million (£121 million) in the six months, just short of analysts’ expectations. The company has edged back estimates for the full year…

• The company also announced that it expects FY profits of about AU$780 million compared with an earlier range of AU$780 million to AU$810 million. The company has not received an acceptable offer for its budget-priced drinks division, which had been for sale. The company says ‘retention is the best course’.

Australia-based Domino’s Pizza Enterprises, which is the largest master franchisee of the Domino’s Pizza offer, is to close 205 restaurants. Some 172 of the units are “loss-making” stores in Japan….

• CEO Mark van Dyck says ‘I said we would move decisively to reshape our business for long-term success. Where change is required, we are acting quickly and transparently. Our priority remains clear—creating value for customers, franchise partners, and shareholders.’

US coffee offer Dutch Bros has reportedly reached 1,000 stores with a new outlet in Orlando, Florida.

Coca Cola Europacific Partners has reported full year 2024 numbers saying that revenue rose by 11.7%. CEO Damian Gammell reports ‘2024 has been another solid year for CCEP with continued robust top and bottom-line growth….’

• He says ‘our geographic diversification, reinforced by the Philippines, means we are even more resilient. We’ve grown share ahead of the market, created value for our customers, delivered underlying volume growth and gains in revenue per unit case through revenue and margin growth management.’

• Mr Gammell says ‘we are well placed for 2025 and beyond in categories that are growing, with strong investment and commercial plans in place to drive growth. We are confident that we have the right strategy, done sustainably to deliver on our mid-term growth objectives.’

• The CEO concludes ‘our FY25 guidance, combined with the resumption of share buybacks, demonstrate the strength of our business and our ability to deliver continued shareholder value. We have the platform and momentum to go even further while continuing to be a great partner for our customers and a great place to work for our colleagues.’

Nestlé has reiterated its desire to keep its water business but the search for a partners to work with it continues.

HOLIDAYS & LEISURE TRAVEL:

Airbnb yesterday reported Q4 numbers ahead of expectations saying that sales grew by 12% year-on-year in Q4 compared to 10% growth in Q3. Earnings were 73 cents per share on sales of $2.48 billion in the quarter….

• The company said that it saw a ‘notable acceleration in the number of first-time bookers on our platform’ and adds ‘globally, we saw an acceleration in growth across all regions, with Asia Pacific and Latin America again leading the way.’ Gross bookings rose by 13% to $17.6 billion, ahead of analysts’ expectations of $17.2 billion.

• Airbnb says ‘we outpaced the travel industry’s growth, with revenue, nights booked, and GBV all accelerating in Q4. This growth reflects the significant improvements we’ve made to Airbnb’s usability, affordability, and reliability—and we’re excited to build on this momentum in 2025.’

• It says ‘over the past several years, we’ve been preparing for Airbnb’s next chapter’ and adds ‘today, our service is better than ever, and our platform is ready to support the new offerings we’ll launch as part of our May 2025 Summer Release. While these efforts are setting us up for long-term growth, they’re already driving a positive impact on the business, which is evident from our Q4 results.’

• Airbnb says it ‘is a fundamentally stronger company today than it was several years ago. Since our 2020 IPO, our revenue and GBV have tripled, and in 2024, we successfully outpaced the travel industry’s growth. We’re continuing to build on this momentum in 2025, executing a multi-year strategy to perfect the core service, accelerate growth in global markets, and launch and scale new offerings.’

The Welsh government has rejected calls to exclude children from its plans for a £1.25 per night tourism tax in the principality. The charge at hostels and campsites would be 75p. It would be up to councils to decide whether to introduce the fee, possibly starting in 2027. Finance Secretary Mark Drakeford said leaving out the U-18s would lead to a ‘significant fall’ in revenue…

• UKHospitality Cymru has been calling for an exemption for children as it would align Wales with many European nations that also exclude children. The trade body has also called for limits on how local authorities can spend the funds, saying that the money should be spent in areas that would benefit hospitality.

Heathrow CEO Thomas Woldbye has indicated that he would like planes to be using the airport’s third runway within ten years.

Airline departure tax in France is to more than double next month. Short haul flight tax will rise from €2.63 to €7.40 on flights departing from France.

OTHER LEISURE:

Merlin is reported to be exploring a sale of some of its aquarium assets as it seeks to prioritise investment in its biggest international sites….

• Sky News reports that the company ‘is working with bankers on a possible disposal of sites in a number of cities in Britain and overseas.’ It says the group, which owns over 40 aquariums globally, has appointed Rothschild to oversee the potential sale.

• A Merlin spokesperson told Sky ‘like any well-run business, Merlin regularly reviews its estate, to ensure it reflects the company’s long-term growth strategy.’ It adds ‘we continue to invest in our attractions globally – opening 24 new rides, attractions and experiences in 2024.

Elon Musk has reportedly said he would drop his $97.4 billion bid OpenAI if the company converted to a for-profit company.

It is rocket science company Blue Origin, owned by Amazon founder Jeff Bezos, is reported to be laying off about 1,400 employees, or about 10% of its workforce.

FINANCE & MARKETS:

GDP growth eases recession fears. The ONS yesterday reported that ‘the economy picked up in December after several weak months…’

• …’meaning, overall, the economy grew a little in the fourth quarter of last year. Across the quarter, growth in services and construction were partially offset by a fall in production. GDP per head, in contrast, fell back slightly in the quarter.’

• It adds that ‘film distribution and pubs and bars all had a strong month, as did manufacturing of machinery and the often-erratic pharmaceutical industry. However, these were partially offset by weak months for computer programming, publishing and car sales.’

The Telegraph reports that Business Secretary Jonathan Reynolds is to tell the Competition and Markets Authority to ‘be more agile.’ This sounds like an instruction to take more risk.

The RICS reported a pickup in property activity in January.

Sterling up at $1.2554 and €1.2012. Oil higher at $75.12. UK 10 year gilt yield down 5 basis points at 4.49%. World markets mixed yesterday & London set to open around 2 points better as at 6.30am.

RETAIL WITH NICK BUBB:

• Today’s News: There is again no Retail company news out so far this morning, apart from the usual share buyback announcements, but yesterday lunchtime JD Sports announced that Andy Higginson, the non-executive Chairman, has been appointed as an independent non-executive Director of Majid Al Futtaim Holding (which, based in Dubai, is the family-owned conglomerate that owns and operates shopping malls and retail businesses in the Middle East: it is best known as the owner of the giant Mall of the Emirates in Dubai and as the franchisee of the French hypermarket chain Carrefour in the Middle East).

• Today’s Press (1): The invaluable press summary email from the Guardian about today’s front-page headlines notes that the Guardian itself leads with “‘Everything is on the table’ to end Ukraine war, US tells Nato allies”. There is a hopeful note for Kyiv in the Times: “US may provide air cover to protect Ukraine peace”. Not so hopeful for the neighbourhood in the i: “1949 deal to protect Europe from war is history – Trump’s message to shocked world leaders”. “Quick fix is a dirty deal” – that’s the Metro, with words from Kaja Kallas, the top EU diplomat. A UK angle in the Daily Telegraph: “2.5pc on defence won’t touch the sides”. The Financial Times leads with “Macron says Europe must muscle up on security after Trump ‘electroshock’”, while “End the war but don’t let Putin win the peace” says the Daily Express. “Reeves under pressure to ‘come clean’ on expenses” is the Daily Mail’s
lead story. 

• Today’s Press (2): In terms of Retail news in the papers today, it’s thin pickings again, but the FT highlights that the private equity firm Cinven has agreed to sell upmarket British shoe brand Kurt Geiger to the New York-listed fashion group Steve Madden for around £289m. That story also generates an eye-catching fashion model photo opportunity for the Times on its main Business page (“Kurt Geiger is bagged”). The Times also highlights that retailers in the West End missed out on £640m in sales last year from international visitors due to the removal of tax-free shopping for tourists, according to research from the New West End Company (“West End ‘lost £640m’ after tax perk binned”). The Times also flags that “two popular Danish retailers” (Flying Tiger and Sostrene Grene) have set out plans to boost their presence on UK High Streets with new store openings.

• M&S Fashion Watch: While we think of it, last week’s announcement from M&S that John Lyttle is to join as the MD of Clothing, Home & Beauty (in “a planned succession” to Richard Price) also flagged that Maddy Evans, who is currently Director of Womenswear, is to take on a broader role including Lingerie and that David Brittain (who used to work at John Lewis) will be joining M&S as Director of Home & Beauty at the end of April from Amazon Fashion Europe (replacing Heidi Woodhouse). The hard-driving M&S CEO, Stuart Machin, said in the press release that “Changes underway to embed strategic sourcing partnerships, a modern planning platform and an efficient logistics network are nascent and there is lots to do to develop a truly omnichannel Clothing, Home & Beauty business”.

• News Flow Next Week: As it’s skool half-term, next week is very quiet in terms of UK company news (there’s nothing scheduled for Retailers), but over in the US the Walmart Q4 results on Thursday will generate some headlines. And first thing on Friday we get the widely followed GFK Consumer Confidence index for February and the ONS Retail Sales figures for January (the 5 weeks to Feb 1st, as this is a 53-week year).