M&B, ROO, Heartstone, Mowgli, Shaftesbury, inflation & other:

A DAY IN THE LIFE:

I think it’s interesting that biases, but let’s call them here ‘preconceived ideas’ as it sounds less visceral, tend to persist.

In fact, they often have a fact-free shield to keep them intact.

For example, we tend to think that bees are hardworking, friendly good-guys and wasps are evil pests that can sting you more than once.

But I’ve never to my knowledge been stung by a wasp whilst bees have stung me often and I’m sure that more than one have stung me multiple times and still haven’t had the decency to die yet the bias persists, bees are the goodies.

And, when travelling to the USA and China, it’s hard not to imagine that the former will be more like home than the latter because, how could it not be?

After all, the Americans speak a form of English but, once you stray off the beaten path, it’s quite a surprise to see all those churches and gun-shops whilst a trip to Shanghai will show you shops, streets, cars and indeed a way of life that’s much more what we’re used to than we perhaps expected.

Anyway, just saying.

And, if proof were needed, there’s just time before the weather breaks to go out in the garden a few more times and coo and fawn over a bunch of vicious bees whilst trying to terminate the odd fly, aphid and caterpillar eating wasp.

On to the news:

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PUBS & RESTAURANTS:

Demographics & societal change:

The FT comments on the global implications of additional health warnings on alcohol sales and adds that companies are ‘responding to signs of weakening alcohol demand that are particularly stark among the young.’ Asahi recently said that societal changes and alternative leisure opportunities were more important than health issues and Diageo is cutting costs…

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Hospitality insolvencies:

RSM has analysed data provided by the Insolvency Service and reports that insolvencies in the accommodation and food service sector in England and Wales are up 4% month-on-month from 271 in February 2025 to 282 in March 2025. Seasonal factors are at play and it goes on to say that insolvencies are 10% lower for the 12 month period from 3,770 in the 12 months to March 2024 to 3,407 in the 12 months to March 2025….

Inflation:

Commenting on yesterday’s news that inflation was running hotter than expected, CEO of UKH Kate Nicholls says the ‘significant increase in inflation is unsurprising given the £3.4 billion in annual cost increases that hit hospitality in April.’ She adds ‘it’s clear that, on top of continuing hikes in utility prices, the raft of additional costs from the Budget, which came into force in April, is putting unsustainable cost pressure on already strapped businesses. Regrettably, that forces up prices and so fuels inflation….’

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Other news:

Commenting on the Welsh Government’s recent actions, UKH says that the proposals to omit hospitality from business rates reform will dramatically increase costs. UKH Cymru says ‘returning the sector to full business rates, on top of enormous cost increases this year, and excluding it from reform would see bills dramatically increase yet again. This level of increase would be unsustainable, forcing businesses to cut jobs, reduce trading hours or, in the worst-case scenario, close for good….’

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WAGES – ONE BUSINESS’S COSTS BECOME ANOTHER BUSINESS’S INCOME:

Whilst wages will be the largest line (excluding sales) on the P&L account for many hospitality companies, when wages rise in general, so too should demand. Herewith a piece we put out to clients earlier in the month:

Wages – both a cost to industry and a boost to demand:

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MITCHELLS & BUTLERS – H1 NUMBERS:

Mitchells & Butlers has reported H1 numbers saying that LFL sales grew by 4.3% in the period. Volumes were ‘broadly flat’. The company reports total revenue of £1,454m (HY 2024 £1,396m) with operating profit of £181m (HY 2024 £164m). PBT is £134m (HY 2024 £108m) and basic earnings per share of 16.8p (HY 2024 13.6p). There is no dividend. The group reports that operating margin increased to 12.4% (HY 2024 11.7%) and it says that ‘full year operating profit expected to be at the top end of current consensus.’ Like for like sales: M&B reports that food LFL sales were up by 3.8% in the 28 week period with drink sales up 4.3% in LFL terms.

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COMPANY NEWS:

Deliveroo has published the Scheme Document relating to the recommended bid for the company by DoorDash. The meetings to approve the scheme will be held on 16 June.

Heartstone Inns, which runs nine free-houses in the south west of England and South Wales, has reported numbers to 29 December 2024 to Companies’ House saying that revenue rose from £9.69m to £10.28m. EBITDA is up by 38% at £1.39m and the PBT is up from £15k to £141k (after the provision of £350k against the diminution in value of property)…

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Flock Inns, which is a part of the Timpson Family portfolio of businesses and which comprises four ‘fantastic [pub] sites – The White Eagle and The Oyster Catcher in Anglesey, The Partridge in Cheshire and Le Tremplin in Morzine, France,’ has reported numbers for the year to 28 Sept 2024 to Companies’ House saying that turnover rose from £5.82m to £6.41m. PBT rose from a marginal £5k to £400k. The company reports retained earnings of £878k and shareholders’ funds of around the same number.

Mowgli Street Food Ltd has reported full year numbers to end-July 2024 to Companies’ House saying that turnover  rose from £30.9m to £40.5m. PBT is up from a loss of £476k to a profit of £512k. The company’s accumulated profit (or loss) account has swung from a loss of £319k to an accumulated profit of £193k and shareholders’ funds are a positive £293k…

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Gregg’s has banned a shoplifter, Patrick Verry, 33, of no fixed abode, from every one of its shops in the country.

Wetherspoon has been named amongst ‘Europe’s Best Employers 2025’ in The Financial Times and Statista report. Wetherspoon’s head of people, Tom Ball, says ‘we are delighted to be named in the report.’ He adds ‘our staff are vitally important to the overall success of the individual pubs and the company. We strive to offer each of our employees the opportunity to progress within the company.’

West End property company Shaftesbury Capital has updated on trading in its AGM statement saying that ‘there continues to be strong demand across our West End portfolio with positive trends in footfall and sales, high occupancy and leasing activity.’ The company adds that corporate tenant ‘customers recognise the exceptional features of London’s West End with broad appeal to domestic and international businesses and visitors.’

HOLIDAYS & LEISURE TRAVEL:

EasyJet has reported half year numbers to 31 March saying that ‘we continue to see strong demand for easyJet’s flights and holidays,.’ It reports that bookings for summer 2025 EasyJet Holidays are 77% sold….

The Spanish government has called for the removal of the listings of nearly 66,000 properties on rental platform Airbnb on the grounds that they breach regulations for tourist accommodation. The BBC points out that the clampdown comes as protests against over-tourism have begun ahead of the summer season. Demonstrations in the Canary Islands on Sunday attracted thousands of people.

OTHER LEISURE:

Light Cinemas Group, which operates 14 cinemas across England, has reported full year numbers to 1 Aug 2024 to Companies’ House saying that revenue rose from £33.1m to £41.0m with PBT swinging from a loss of £2.5m in FY23 to a profit of £894k in the year under review. The company still has a substantial accrued loss of £15.7m since incorporation, but this has fallen by the amount of earnings retained. The group has negative net worth of £10.8m, down from a negative £11.3m at the end of the prior period…

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FINANCE & MARKETS:

The ONS has reported that annual house price in London for the year to April was less than 1%. Rents in the capital, however, rose by 8.4% having risen by 8.7% in the prior year.

Sterling slightly lower at $1.3427 and €1.1851. Oil lower at $64.98. UK 10 year gilt yield 5 basis points higher at 4.75%. World markets heading lower yesterday and London set to open around 44 points lower as at 6.30am.

RETAIL WITH NICK BUBB:

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