Food price inflation, breweries, packaging, Caprice, Flat Iron & other:

A DAY IN THE LIFE:

After weeks of sunshine, a glance out of the window, where it’s clearly raining, suggests that it’s Half Term and the indoor attractions might well have a good run of it.

Because bowling, cinemas and the like, although they’re buffeted by other forces, of course, do better in wet weather than do the pubs’ beer gardens.

And iced-cream sales but anyway, the kids’ holiday means that there are few scheduled releases this week.

So plenty of time to read a book and, with that in mind, thanks go out to subscribers who purchased Big Daddy, which was published in Kindle format on Friday.

But despair not, there’s still time to catch up on the action as the book is still available:

• Here on Kindle

• And here in hardback or paperback

On to the news:

PUBS & RESTAURANTS:

Food price inflation:

The British Retail Consortium reports that UK food inflation rose for the fourth consecutive month in May to hit a one year high at 2.8%, up from 2.6% in the year to April. The BRC says that this has been driven by fresh food price rises. It adds that ‘fresh foods were the main driver, and red meat eaters may have noticed their steak got a little more expensive as wholesale beef prices increased.’ It says that non-food inflation remained in negative territory at minus 1.5% in the year.

WFH:

British Land, which owns the Broadgate office complex in the City of London, on Friday said that demand was continuing to pick up for London offices and that this was beginning to ‘trickle down’ to older buildings as tenants sought to source cheaper rents. This bodes well for the return to work and, though WFH is far from dead, there is a degree of balance coming into the market…

• The FT reports that ‘since Covid-19, big office tenants have been narrowly focused on the best-quality space in new or freshly refurbished buildings, as they try to lure employees back to in-person work.’ British Land CEO Simon Carter now says ‘there is definitely the trickle-down effect.’ He adds that ‘the return to the office is much stronger than anyone anticipated.’

• This may either confined to British Land buildings and there may be a degree of wishful thinking involved but, if workers really are coming back in larger numbers, then it will come as a relief to F&B operators with sites in office-heavy locations. Certainly data provider CoStar believes that office vacancy levels fell slightly in London’s central City and West End districts in the first quarter.

Breweries:

The craft brewery market has been subject to consolidation for some time with the number of breweries reducing even when the number of brands remains the same. The Times reports that ‘more than 40 breweries have become insolvent over the past year, as independent craft beer producers struggle against rising costs and weaker consumer spending….’

• This did become a hot area, not least because crowd funders seemed to find the idea of investing in a brewery more interesting than, say, taking stock in a funeral director’s or a chemical company.

• And one can see why but, at the end of the day, many of the operators failed to make money. Where brands had been successfully built (at least from a marketing point of view), these may have been purchased by rivals but the number of operators has come down.

• Accountant UHY Hacker Young says insolvent breweries in the year to February included Hackney Brewery, Burton Town Brewery and Fourpure, the former south London brewery where Boris Johnson and Rishi Sunak, as the prime minister and chancellor respectively, posed for a photo shoot in 2021.

• UHY Hacker Young partner Brian Johnson says ‘the craft beer boom was one of the most exciting recent trends in food and drink. Unfortunately, it is a sector that attracted too many entrepreneurs who struggled to break even.’ He adds ‘the recent closures suggest the UK’s craft beer market cannot continue to support all the independent producers that have sprung up in the last 15 years. Weak consumer spending means many breweries will have to adapt to leaner times.’

Packaging costs, extended responsibility:

Trade bodies UKHospitality, the British Beer and Pub Association, British Institute of Innkeeping, Campaign for Real Ale, Society of Independent Brewers, Wine & Spirit Trade Association, Independent Family Brewers of Britain, Federation of Wholesale Distributors, Cider UK and British Glass have written to the Prime Minister and Chancellor to highlight the economic impact of Extended Producer Responsibility on investment and growth in the UK….

• The letter highlights the fact that venues will pay twice for waste collection, due to poor policy design incorrectly classifying bottles of beer and wine as household waste and subject to a packaging levy, despite not leaving hospitality premises. It says the fact that no costs have yet been provided is ‘negatively affecting investment decisions and business confidence.’

• UKH also highlights the disproportionate cost burden on glass. It says this ‘is likely to drive certain product types into plastic, undermining the high recycling rate for glass and the EPR’s objective to drive recycling.’

• The letter says ‘the sector and its supply chain is deeply concerned at the introduction of Extended Producer Responsibility in its current form.’ It adds ‘there is a widespread belief that this legislation is being introduced far too quickly, and the financial burdens placed on businesses and their impact on growth, are not being acknowledged by Defra.’

• The letter makes clear that ‘EPR comes at a time when there are cumulative issues affecting the sector including changes to employer National Insurance Contributions.’ It says ‘we do not believe that due regard has been considered to the full economic impact of this policy measure on investment and growth in the UK, and therefore efforts to alleviate them have been deprioritised.’

Disposable incomes:

Energy bills are set to fall, leading some observers to suggest that households should shop around for cheaper energy deals to lock in prices.

Other news:

Members of the UK Spirits Alliance, which represents 280 large and small drinks producers and bars, say higher taxes mean increasing exports is a ‘pipe dream’ reports The Daily Mail. The recent trade deal with India will see tariffs on UK whisky and gin fall from 150 per cent to 75 per cent.

Late night: The Guardian becomes the latest of several observers to look at the late night market. It speaks with M&B’s Phil Urban and says ‘a social media and a home delivery boom has shifted younger people’s attitude to going out and risks shrinking the late night entertainment market….’

• The Guardian points out that in 2013, the UK had 1,700 nightclubs. By June 2024 there were fewer than half as many, just 787, according to figures from the analysts CGA by NIQ and AlixPartners. Covid shut the industry down and the recovery since has been patchy to say the least.

COMPANY NEWS:

CEO of Pizza Express Paula MacKenzie, where the brand turns 60 this year, has told The Times that the company will continue with its revitalising the brand. It is focusing on key areas including refurbishing about three quarters of the chain’s 358 restaurants, creating new formats and capitalising on customers’ loyalty, she says. Ms MacKenzie adds ‘what we are trying to show is that there is a contemporary version of Pizza Express and not just the one that people might remember from the past….’

• The Times adds that ‘the pizza scene is more crowded than ever. Other high street names including Prezzo, Bella Italia and Zizzi have been around since about the turn of the millennium, followed by Franco Manca in 2008, but the list of new entrants continues to grow: Pizza Pilgrims, Rudy’s, Homeslice, Alley Cats, Yard Sale, Pizza Union.’ And Rudy’s and Carluccio and others, of course.

Sky News reports that McWin Capital Partners, which backs the Gail’s bakery chain, is teaming up with TriSpan and the partners are ‘in advanced talks to acquire Flat Iron, one of Britain’s fastest-growing steak restaurant chains.’ The two private equity houses are reported to be in exclusive discussions, with a deal possible in approximately a month’s time….

• FI Holdings, parent company to the Flat Iron Steak Ltd, most recently reported numbers for the 52 weeks to 25 August 2024 to Companies’ House. It reported revenues up by 38% to £49.6m. Adjusted EBITDA for the 52 weeks ended 25th August 2024 was £5.6m (2023: £3.7m). The company reports that its GP% fell from 36.2% in 2023 to 33.5% in the year under review.

• The company says ‘with three successful openings launched in the period, the directors are also pleased to report that the existing estate has also performed very well and covers have grown year on year across all restaurants.’ It adds that it ‘has further demonstrated its appeal outside of London with openings in Manchester and Leeds during the year.’ The company now has 17 restaurants in operation.

• Trading – outlook. FI Holdings reports ‘at period end, the business had a cash balance of £3.5m and the Flat Iron group had net bank debt of £2.0m. The bank borrowings mature between September 2025 and May 2027. The directors believe the business is well funded and well positioned to continue its growth both organically and from further new openings both in and out of London.’

• Balance sheet: The accounts show retained losses since incorporation rising from £22.6m to £24.3m after losses for the year are added. Shareholders’ funds are a negative £5.1m against negative £3.4m in the prior year. The company has net debt – not including ‘other loans’ – of £2.0m, up from £1.6m in the prior year. Other Loans, which are interest free, are up to £10.8m vs £9.9m in the prior year. The company reports that some £2.5m of loans were converted into equity in November 2020.

Chef Tom Kerridge reports that he has decided to close his Butcher’s Tap & Grill in Chelsea in London. The final service will be on Sunday 1 June. A spokesperson says ‘the team has worked hard to make the concept work, but nothing is a given in the challenging climate hospitality businesses now face. Increasing costs demand a match in revenue and turnover that has not materialised at the site, providing an opportunity to regroup, rethink and rebuild.’

The Times reports that KFC is placing a big bet on its UK business where it is pledging to invest almost £1.5 billion over the next five years….

• The Times reports ‘the chain, which celebrates its 60th birthday in the UK this year, plans to invest £1.49 billion towards growing its thousand-strong estate and upgrading many of its existing restaurants, which it estimates will create thousands of new jobs.’ It isn’t immediately clear how much, if any, of the £1.5bn will be provided by franchisees.

Caprice Holdings has reported rather aged results for the year to end-December 2023 to Companies’ House saying that revenue came in at £97.1m, up from £74.4m in 2022. The group reports a pre-tax loss of £5.9m compared with a £1.2m profit the previous year…

• Director Chris Robinson comments ‘trading surpassed the prior period with previous site openings yielding their first full year results along with the opening of Sexy Fish in Manchester.’ He says ‘whilst inflationary pressures reduced consumer confidence in contracts to the bounce-back highs of the prior post-pandemic period, the company’s position provided compelling for our customers which contributed to another impressive year.’

• The company adds ‘this is notable considering the cost headwinds faced in the first half of the year from energy prices and knock on costs from the supply chain and interest rate hikes.’

McDonald’s in the US has announced that it will close its CosMc’s sites from late June this year. The CosMc’s concept was launched in late 2023. It has only five locations, one just outside of Chicago and four in Texas.

Majestic Wine has told the MCA’s Hostech conference that its acquisition of nine-strong wine bar Vagabond last year offers both parties the opportunity to strengthen their businesses through data.

HOLIDAYS & LEISURE TRAVEL:

Whitbread has this morning announced that Christine Hodgson has been appointed as Chair with effect from 1 September 2025, replacing Adam Crozier who will step down as Chair and retire from the Board on the same date. The company reports that ‘Christine, who is also Chair of Severn Trent PLC, brings a wealth of experience, having held senior roles across the technology and consumer-facing sectors, working with multiple high-growth international companies….’

• Adam Crozier joined the Board in April 2017 and has been Chair for the past seven years. ‘During this time, Whitbread has evolved into a focused hotel business with a clear strategy centred on becoming Europe’s No.1 budget hotel business.’

• Senior Independent Director Richard Gillingwater says ‘we have conducted a thorough process, and it was evident that Christine will be an outstanding successor to Adam. Christine’s experience working with high-profile consumer and technology businesses will be hugely valuable over the coming years. On behalf of the whole Board, I would like to thank Adam for his guidance, wisdom, enthusiasm and commitment, steering the Company through a period of significant change to create sustainable value for shareholders.’

The Guardian reports that holidaymakers in countries hit the hardest by Donald Trump’s trade tariffs are taking the US off their list for trips abroad. It quotes Trivago as saying that it has seen double-digit percentage declines in bookings to the US from travellers based in Japan, Canada and Mexico. The latter two countries were the first on Trump’s tariff hitlist when he announced tariffs of 25% on 1 February.

The Times reports that Parkdean Resorts is planning to raise £250 million from investors as it seeks to capitalise on the UK staycation boom. Parkdean has 66 freehold venues in the UK running the length of the country. It is reported to have hired bankers from Rothschild to advise on the fundraising, which is set to get under way from this week….

• The Times quotes CEO Steve Richards as saying that ‘the UK staycation market is strengthening as hard-pressed families prioritise spending time away together … Parkdean Resorts is ideally placed to capitalise on this growing demand.’ He says bookings for the summer are approaching 100%.

OTHER LEISURE:

Cinemas, both in the US and this side of the Atlantic, are looking to Disney’s Lilo and Stitch and the latest instalment of Paramount’s Mission: Impossible franchise to provide the industry with a boost over the summer.

Trump Media. The Financial Times reports that the Trump family media company, Trump Media & Technology Group (TMTG), which owns Truth Social, ‘plans to raise $3bn to buy cryptocurrencies such as bitcoin, in a bet on the kind of digital assets that have been championed by the US president’s administration’. It says the plan is to raise $2bn in new equity and a further $1bn via a convertible bond…

• The FT quotes ‘two people familiar with the plans’ as saying that ‘the offering had been increased in size in recent weeks due to strong demand.’ TMTG responded in a statement, saying that ‘apparently the Financial Times has dumb writers listening to even dumber sources’. The ‘Trump family’s push into cryptocurrency…has sparked concerns about conflicts of interest’ says the FY.

• Nothing to see here. But, when asked ‘who runs TMTG’, Chat GPT tells us Trump Media & Technology Group is led by Devin Nunes, who serves as the Chief Executive Officer, President, and Chairman of the company.’ It says of Nunes, a former U.S. Congressman from California, that ‘in addition to his role at TMTG, he was appointed Chair of the President’s Intelligence Advisory Board in January 2025.’

• Chat GPT reports that ‘ownership of TMTG remains closely tied to the Trump family. While Donald Trump founded the company and was its majority shareholder, he transferred his controlling stake—valued at approximately $3 billion—to a trust managed by his son, Donald Trump Jr., following his re-election.’

FINANCE & MARKETS:

Hard to keep up but President Trump has most recently delayed his only slightly less recently introduced 50% tariff on EU products until 9 July after having a ‘very nice call’ with the bloc’s Ursula von der Leyen.

Sterling up (since Friday) at $1.3553 and €1.1918. Oil higher at $64.43. UK 10 year gilt yield down 7 basis points at 4.68%. World markets a shade lower last seen but London set to open around 5 points higher as at 6.30am.

RETAIL WITH NICK BUBB:

• Saturday’s Press and News (1): On Saturday, several of the front-page headlines were focused on concerns over Government spending cuts. The Daily Mail reported an ‘exclusive” story that the Deputy Prime Minister and Housing Secretary Angela Rayner is “at war” with Keir Starmer and Chancellor Rachel Reeves over plans to slash her department’s budget (“Rayner on the rampage”), whilst the Guardian led with another ‘exclusive’, that the Government’s child poverty strategy has been postponed until at least the autumn (“Thousands could suffer as child poverty plan delayed”). Plans to open a network of mental health A&Es across the UK were the lead story in the Times (“New mental health A&Es ‘will relieve NHS strain’”), whilst the Daily Telegraph (which is to be sold to a US private equity fund called RedBird, as was widely reported in the weekend press) wailed that “Protester charged
for mocking Hezbollah” and the main story in the FT was about the increasingly erratic Donald Trump and his threats to impose higher (50%) EU tariffs. And… if you’re wondering whether the wretched Boris Johnson attacked Donald Trump’s lamentable failure to put pressure on Russia to end the war in Ukraine in his Daily Mail Saturday column, he instead defended the woman imprisoned for tweeting that immigrant’s hotels should be burnt down, wailing that “In the week Labour announced plans to release rapists and killers early, there’s one prisoner who poses no threat…Free Lucy Connolly Now”. 

• Saturday’s Press and News (2): In terms of Retailing news in Saturday’s papers, there was plenty of coverage of the better than expected ONS Retail Sales figures for April on Friday, with the main Business story in the Guardian headlined “Sunshine drives biggest leap in retail sales for four years”, whilst the Telegraph also flagged that “Retailers boosted by hot and dry spring” and the Daily Mail noted that “Barbecue boost for retailers lifts sales”. The headline in the Times was more factual: “UK retail sales beat expectations with 1.2% rise”. Alongside that Retail Sales article in the Times was a big feature on the high savings ratio, headlined “Can Britain’s savers change tack and splash out?”.  The Times also picked up on the warning from Games Workshop on Friday that its bumper licensing revenue would fall back (“Games Workshop sounds a retreat”), although the Daily Mail
took a more cheerful line: “£20m bonanza for Warhammer staff as profits soar”.   

• Saturday’s Press and News (3): M&S was also in focus in Saturday’s papers, with both the Guardian the FT highlighting that the Indian IT contractor Tata Consulting Services is in the spotlight over its role in the recent cyber-attack and an investigation into whether it was the gateway…The FT also had a detailed feature below that TCS story about the M&S cyber-attack (“Old-fashioned con leaves chain with £300m bill”), noting that “’Social engineering’ trick allowed hackers to enter M&S systems and wreak havoc”. And on its Opinion page, the FT had an article by its Consumer Affairs correspondent about the M&S cyber-attack (headlined “It’s not just any cyber meltdown, but will shoppers forgive M&S?”), concluding that M&S shoppers seem to have been very forgiving so far and that Sparks card holders should be rewarded for their loyalty.. 

• Sunday’s Press and News (1): On Sunday, according to the useful BBC News website summary, several front pages led with stories over ‘benefits for children and the elderly’. The Observer had a full-page spread on the Government’s plan to scrap the two-child benefit cap, describing the Prime Minister’s Downing Street operation as bowing to “party pressure”. The paper noted that the Treasury has been told to find the £3.5bn that getting rid of the benefit limit on families will reportedly cost. The Sunday Telegraph’s top story said that Nigel Farage plans to “outflank” Keir Starmer by “committing to scrap the two-child benefit cap and fully reinstate the winter fuel payment”. Campaigners have warned Downing Street there will be “hell to pay” if the Government fails to restore the winter fuel allowance to all and pensioners are “left out in the cold”, according to the Sunday Express. The
Sunday Mirror led with a “new twist” in the investigation into arson attacks linked to two properties and a car linked to Keir Starmer, highlighting that the fires are “being probed for possible Kremlin involvement” and the Mail on Sunday also reported on the security services looking into the possibility that the attacks had Kremlin links. And the former sub-postmaster Alan Bates has said the Government is running a “quasi kangaroo court” dealing with Post Office scandal compensation, according to the Sunday Times’ main story: writing in the paper, the campaigner said he had been given a “take it or leave it” settlement offer worth “less than half his original claim” (“Mr Bates vs the bureaucrats”).

• Sunday’s Press and News (2): On Sunday, in terms of Retailing news in the papers, M&S remained in the spotlight, with the main Business story in the Sunday Times the news that M&S is fighting back after the recent cyber-attack with a store expansion plan, including a deal to buy 12 former Homebase stores to convert into M&S Food retail park stores (“M&S defies hack with Homebase stores deal”). The Observer re-hashed last week’s news about the cost of the M&S cyber-attack (“Cyber-attack will cost M&S £300m and last until summer”), but the Mail on Sunday had an exclusive interview with M&S boss Stuart Machin, who says ‘he’s been working so hard he’s barely had time to phone his Mum’ (“We intend to come back better and stronger than ever”).    .

• Sunday’s Press and News (3): In terms of the Economics comment columns in the Sunday papers,  we give our usual shout-out to the column by David Smith, the Sunday Times Economics correspondent, about the economic outlook (headlined “Trade deals won’t transform growth – but they’ll help”), in which he noted that ‘The Government has started to repair its relations with business’. David Smith also wrote an article in the main section of the paper, in a Politics feature about the battle about Labour’s spending cuts (“Pulling the rug from under Reeves”), in which he highlighted that the “Embattled Chancellor still has a trick up her sleeve” (ie freezing the income tax thresholds for another 2 years). We also enjoyed the column by the veteran Economics commentator William Keegan in the Observer about Brexit and the recent EU deal (headlined “We’ve pressed the reset button. Now let’s
reboot Britain”).

• Bank Holiday Monday Press (1): According to the invaluable Guardian press email summary, “Decades of failure to act on racism inquiries leaves UK in ‘doom loop’” was the splash headline on the front-page of the Guardian on Bank Holiday Monday. “Scandal of fat cats on first ever NHS rich list” wailed the Daily Mail, while the Daily Mirror highlighted fresh Russian air strikes in the Ukrainian capital, with: “Trump’s silence did this.” “Ministers weigh delay to soften welfare cuts” was the main focus at the Times, whilst the Daily Express lamented that “Labour’s fuel U-turn in total chaos”. Meanwhile the i had “HS2 plunged into fresh chaos as major tax fraud claims emerge” as its main story. “Oil chiefs warn of end to shale boom as prices fall and Opec boosts output” was the lead story in the Financial Times, while the Telegraph continued with its ‘free speech’ campaign about the woman
imprisoned for tweeting that immigrant’s hotels in Southport should be burnt down, noting that “Trump pressures PM over Connolly”.

• Bank Holiday Monday Press (2): In terms of Retail news in the Bank Holiday papers, the Telegraph picked up on a revelation in the Mail on Sunday’s interview with M&S boss Stuart Machin, highlighting that he “went into shock” after learning about the cyber-attack that crippled M&S’s computer systems. The Daily Mail took advantage of the dog photo opportunity presented by the news that Pets at Home is expected to reveal a £133m profit with its final results this week and it also flagged that Frasers’ boss Michael Murray has called for ‘bold’ reforms of the Business Rates system to save the ailing High Street. The Times flagged that the investment vehicle that owns the Monsoon and Accessorize fashion chains has reported a loss for y/e August (“Monsoon owner under water amid wage inflation and weak consumer demand”).

Today’s News: Apart from the usual flurry of share buyback announcements, there is no other news out today so far, but on Sunday M&S issued a press release to announce that it was accelerating its Food store expansion by acquiring 12 Homebase store sites, as per the Sunday Times story. The first converted Homebase stores are expected to open in Abingdon and Cannock just before Christmas, both with 18,000 sq ft units. Last year M&S opened six Food stores and two full line stores and this year in total M&S plans to open ten Food stores and two full line stores. M&S CEO Stuart Machin said: “Investing in new and renewed stores is one of our key transformation priorities. Securing these highly desirable sites in priority locations will accelerate this strategy, drive further growth in our M&S food business and most importantly give our customers the best possible M&S
shopping experience”.

Today’s Press: According to the invaluable Guardian press email summary, the front-page headlines of today’s papers are dominated by the events at the Liverpool FC parade yesterday: “Horror as car ploughs into crowd at Liverpool FC victory parade,” is the splash in the Guardian itself. “Elation then horror” says the Mirror, “Liverpool glory turns to horror” writes the Telegraph, while the Sun says: “Horror as car hits Kop fan.” “Horror at Liverpool parade” is the Times headline, “Carnage at the parade” says the Daily Mail and “Horror at the victory parade” is the splash at the i, while the Metro runs a picture of the parade but leads with Trump’s comments: “‘Putin’s gone absolutely CRAZY!’”. Finally, the FT looks at the latest on tariffs with: “EU countries push for swift deal with Washington to head off heavy tariffs”.

BDO High Street Sales Tracker: The weekly BDO High Street Sales Tracker for medium-sized Non-Food chains gets a lot of attention, because… it is the only weekly (as opposed to monthly) guide, that’s publicly available, to what’s happening to Non-Food Retail spending. Unfortunately, it is focused on relatively upmarket/small Fashion retailers and underplays “big ticket” household spending (although it includes a few Homewares and Lifestyle retailers) and the survey’s approach is statistically flawed. However, it’s worth noting that the latest surveys have been painting a less bright picture since Easter, with Online sales under pressure… in w/e May 4th Total BDO LFL sales were only 0.3% up, in w/e May 11th Total BDO LFL sales were down by 3.3% and in w/e May 18th Total BDO LFL sales were down by 1.4% (with Fashion sales alone down by 1.2% LFL).

News Flow This Week: After the Bank Holiday yesterday and with the skools on half-term holiday, this week is a bit quiet in terms of company news, although the Kingfisher Q1 results and the Pets at Home finals are out tomorrow. Tomorrow morning also brings the latest monthly Kantar grocery sales figures (which will reveal the damage to M&S Food sales since Easter), with their rival NielsenIQ following with its own monthly grocery sales figures on Thursday morning.