Food & drink prices, jobs, Budget, Butlin’s, Soul Foods & other:

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A DAY IN THE LIFE:

Well, the Advent Calendar is looking a little worn now and, although I can’t prove this without destroying the thing myself, I think somebody might have eaten 24 December already.

It’s bigger than the other days.

And it’s been tempting but I’m pretty sure it wasn’t me that did it.

And there’s no real defence because, whilst the perpetrator, if there is one, can’t yet be outed by an absence of rattles, there are still too many to be sure, and the material on the back is too thick to see through, even the dog knows that you shouldn’t go 1 – 2 – 3 – 4 – 24, not in anybody’s language.

Given the price of chocolate these days I’ve tried my Paddington Stare, but to no avail and I’ve had to fall back on ominously telling anyone who would listen that the absence of proof isn’t the proof of absence.

Anyway. Enough of that. It’s the end of the week so let’s wish Hull luck vs Middlesborough tonight and move on to the news:

PUBS & RESTAURANTS:

Food & drink prices.

CGA and Prestige Purchasing have produced their latest Foodservice Price Index suggesting that food and drink prices in hospitality fell by 0.3% in October 2025. They report that ‘the downward movement marks an important break in the year’s trends after six consecutive months of rising costs, bringing respite to the UK’s hospitality and foodservice sectors ahead of the festive trading period.’ The report adds that ‘despite the dip, there remains significant volatility across several key food and drink categories….’

• The ‘most significant downward movement was recorded in the vegetables category, where prices fell by 1.7% year-on-year’, the report says. This is a particularly volatile price series as the weather plays such an important role. The report adds that ‘the outlook remains mixed, with potato yields varying significantly between Scotland and England due to prolonged heat, and brassica sizes remaining small and making winter availability dependent on improved rainfall.’

• Prices also fell, down by 1.5% month-on-month in October, in ‘the milk, cheese & eggs category’ where the move ‘reflects a softening in global dairy markets, with declines in whole milk powder and cheese quotations.’

• Elsewhere in proteins, the report reveals that ‘the meat & poultry category moved in the opposite direction, with prices rising +0.7%.’ It says ‘UK poultry markets face severe volatility due to renewed Avian Flu outbreaks. Unprecedented 30-day export bans on major turkey suppliers are creating acute shortages and record-high spot prices just as festive demand accelerates.’

• Shaun Allen, CEO of Prestige Purchasing, comments ‘the slight decline in the FPI to 150.6 offers a welcome, albeit temporary, respite for operators after six months of consistent month-on-month inflation. However, the market remains incredibly fragile. With Avian Flu disrupting poultry supply during the crucial festive period and structural costs like energy and labour remaining high, this month’s easing should be viewed with caution. Operators must remain agile in their sourcing strategies to navigate the volatility expected through winter.’

• Reuben Pullan at CGA says ‘as hospitality begins the crucial run-in to Christmas, news of an easing in inflation is a welcome development. Nevertheless, months of increases have taken a heavy toll on businesses, and there are plenty of warning signs to suggest this will be temporary respite rather than a turning of the tide. Put alongside ongoing caution in consumer spending, it means hospitality operators will have to be at the top of their game to sustain sales and protect margins over the festive season.’

Hospitality jobs:

UKH has said that it is entirely plausible that the hospitality sector could shed another 100,000 jobs as a result of rises in wage levels and business rates and the potential imposition of tourist taxes in a number of areas. The government maintains that it is ‘protecting pubs, restaurants and cafés with the Budget’s £4.3bn support package.’

Other news:

Scotland. UKH Scotland director Leon Thompson comments on the prospect of the Scottish government imposing a flat rate, rather than a percentage, charge on overnight stays north of the border. He says this is ‘simpler, easier to administer and less costly to business, than a percentage….’

• Mr Thompson adds ‘given the current legislation is unworkable, we welcome that the Scottish Government is being pragmatic in working with industry to address the challenges.’ He says the move ‘is a key step towards fixing the problematic existing legislation and we look forward to engaging with the Scottish Government, opposition parties and councils on the proposed changes.’

• The UKH Scotland director says, however, that ‘while these changes are positive, we remain opposed to the introduction of charges on guests and visitors.’ He says ‘at a time when the country desperately needs economic growth, making holidaying and visiting Scotland more expensive through tax is counter intuitive and I would encourage local authorities to consider the impacts of a levy carefully.’

Wales: UKH Cymru has said that the ‘Welsh Government’s decision to exclude hospitality from business rates reform will hit the sector with £131 million in additional cost over three years….’

• It says that its analysis ‘reveals that, compared to what is currently being paid, the sector’s business rates bill will rise by £19.6 million in 2026/27 (a 23% increase), by £43.3m in 2027/28 (a 51% increase) and by £67.7 million in 2028/29 (an 80% increase).’ It adds that ‘soaring rates bills will accelerate business closures and job losses across Welsh communities, unless the Welsh Government rethinks its currents plans for business rates reform and extends it to include hospitality.’

• Director David Chapman says the ‘staggering increases are the direct result of Welsh Government stripping out any meaningful business rates support from hospitality businesses.’ He adds ‘we need help quickly and the Welsh Government needs to urgently act. It must overhaul its business rates reform to include hospitality to avoid the disastrous consequences these significant extra costs will have on Welsh hospitality.’

World Cup: It’s still a way off but Home Secretary Shabana Mahmood has confirmed that pubs will benefit from extended licensing hours if any of the home nations reach the final stages…

• BBPA CEO Emma McClarkin says the pub has and always will be the home of live sport and there’s no better place to gather under one roof during moments of huge national significance and make memories.’ She says ‘our sector plays a huge part in boosting community spirit and extending licensing hours will mean that people can gather for longer at their local to cheer on our brilliant teams.’

Budget: The board of the Society of Independent Brewers and Associates, which represents around 700 independent breweries, has written to the chancellor saying that they wish to ‘express our deep concern at the impact of last week’s business rates decisions on the hospitality sector.’ It says ‘we would urge you to work in partnership with the devolved nations to look at what further immediate support can be provided to help the industry…’

• SIBA calls for the 5p discount to be upped to 20p and for revaluations to be delayed. It adds ‘we were disappointed that you didn’t take the opportunity in your Budget to lower duty on draught beer sold in pubs’ and says that the comments re lower business rates have not been borne out by the facts.

• SIBA says ‘with pub closures at a new high and having lost more than 100 breweries in the past year, the hospitality sector is in a fragile state. These changes to business rates could be the difference between closure and survival for businesses that operate as the beating heart of communities and bring people together when society needs it most.’

Beer quality: Cask Marque has welcomed the industry initiative, which it has driven, to raise draught beer and cider standards via The Perfect Pint Promise. This ‘brings together leading brewers, pub companies and industry stakeholders in a shared commitment to deliver consistently excellent draught beer and cider — every time….’

• Cask Marque MD Paul Nunny says ‘the pint is a symbol of everything that makes the Great British pub special.’ He says ‘the Perfect Pint Promise is about safeguarding that experience. By working together as an industry, we can ensure customers get the best-quality pint, wherever they are in the country.’

COMPANY NEWS:

Supernova UK Midco Ltd, Soul Foods Group, is a very large operator quick service and coffee restaurants in the UK and Canada as a franchisee of brand owners Burger King (Restaurant Brands International), Starbucks and Taco Bell and KFC (both YUM Brands). The company is ultimately owned by director, Aly Janmohamed. Summary numbers: Supernova UK Midco is the main operating company within the group. It is owned by holding company, Supernova Jersey Holdco.

This company, along with other group entities, provides much of Midco’s financing (and which makes tracking profitability below the operating line perhaps misleading) and, ultimately, by Mr Janmohamed. Supernova UK Midco reports revenues down by 2.5% at £397.8m. It reports that its GP% rose from 33.7% to 35.0% and that gross profit in absolute terms rose to £139.4m from £137.7m in the prior year. Admin expenses have been held steady and the company reports EBITDA up by 19% at £22.8m. The company nonetheless reports an operating loss of £7.7m, reduced from a loss of £9.1m in the prior year….

• Financing and balance sheet. Interest charges are a hefty £34.7m (FY24: £32.0m). This comprises £8.0m of bank interest (FY24: £6.9m) and other interest, including on loans to the holding company and other group entities, of £26.7m (FY24: £25.1m). The above interest charges push the company to a £42.4m loss (FY24. Loss £41.1m). The company has lost £112.8m since incorporation. It has negative net worth – i.e. it is funded by its creditors, loan note providers and banks rather than equity – of the same amount. The group has bank loans of £97.9m (FY24: £78.7m).

• More on trading: Supernova Midco reports that its ‘Directors consider the results to be reflective of the growth mandate as set out at the beginning of the year, recognizing the pace of the growth varies by brand and geographics largely ties to the Franchisor initiatives and country specific policies.’ It says that it ‘has experienced similar macro-economic conditions within the sector such as minimum wage increases, de-escalated levels of inflation and consumer behaviour shifts.’

• The company ‘has continued to focus on driving topline growth through expanding digital platform, doubling down on customer centric service, and improving product taste and quality etc.’ It is ‘driving operational efficiency and disciplined cost management remains in place’ and says ‘this has resulted in both topline and bottom-line improvements and sets a strong foundation for fiscal 2026 and beyond.’

• Outlook: Supernova Midco notes ‘with improving financial results and overall easing macro conditions including the interest rates, the Group has set out plans to continue investments in modernizing the existing assets base while building new restaurants.’ It says ‘in addition to the organic growth, M&A remains a key pillar for growth whenever it makes economic sense.’

• The company notes that its ‘directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company’s financial position means that this is realistic.’ Auditor KPMG has raised no objections to this and it signed the accounts on 28 October 2025.

• Supernova Midco, as the name suggests, is around the middle company in a chain and, provided that the shareholders are the same, the owners may be indifferent as to where the value accrues. Furthermore, there are a number of transactions with the ultimate parent company or any wholly owned subsidiary undertaking of the group that have not been disclosed. The relatively upbeat trading comments are not in line with the trading losses and the supply of materials and various intercompany ‘fees’ could have moved profits elsewhere in the group.

HOLIDAYS & LEISURE TRAVEL:

Butlin’s has reported a slight drop in revenue to £287.5m (FY24: £292.7m) for its year to 31 December 2024. The company reports PBT of £28.4m compared to a loss of £74.2m in the prior year. The 2023 loss was inflated due to a £91.6m property write-down. Butlin’s says that ‘demand for holidays within the UK remained strong despite consumers facing challenging economic conditions across the year…’;

• It adds that its ‘ability to offer value for money through reduced prices, and an improved proposition through our investment programme, were key to revenues remaining in line with prior year in a highly competitive market and despite the disruption caused by flooding at Minehead.’ The company says its ‘continued investment in broadening our proposition and improving the experience for our guests are delivering strong returns.’

London Liverpool Street has retained its title as the UK’s busiest rail and / or tube station. The Office of Rail and Road reports that some 98 million passengers entered and exited the station in the year to March, up 3.7% on the year before, driven partly by the growing popularity of The Elizabeth Line. All ten of the UK’s top ten stations are in London. Birmingham New Street comes in at no13.

CoStar reports on the US hotel industry for the week to 29 November saying that occupancy fell by 1pp with ADR up by 0.2%. REVPAR was down by 0.7%.

FINANCE & MARKETS:

S&P yesterday updated on the UK construction sector saying that November it contracted at the sharpest pace since Covid. It’s PMI came in at 39.4 in the month, down from 44.1 in October. Any number below 50.0 implies contraction…

• S&P reports that ‘November data pointed to a sharp and accelerated reduction in output levels across the construction sector amid widespread reports of challenging market conditions.’ S&P director Tim Moore says that the drop comes ‘as weak client confidence and a shortfall of new project starts again weighed on activity.’

• Partly due to its use of self-employed workers, construction matters to hospitality as it is fast to hire and fast to lay off workers. It can, therefore, quickly inject spending into the economy and just as quickly take it out. S&P says ‘total industry activity decreased to the greatest extent for five-and-a-half years, led by steep falls in infrastructure and residential building work.’

• It adds ‘commercial construction also faced severe headwinds during November as business uncertainty in the run up to the Budget pushed clients to defer investment decisions.’ S&P says that ‘lower workloads, alongside pressure on margins from rising wages and purchasing costs, continued to dampen staff hiring in November. The latest round of job cuts was the most marked since August 2020.’

RETAIL WITH NICK BUBB:

• News Flow Next Week: As we move on into December, next week brings the BRC-KPMG Retail Sales survey for November first thing on Tuesday, followed by the Moonpig interims and Naked Wine interims, along with the latest monthly Worldpanel grocery sales figures. Wednesday brings the latest monthly grocery sales figures from Worldpanel’s rival, NIQ, along with the ProCook interims and the Virgin Wines AGM.