DGE, Meta, Delivery, Deposit Return Scheme, Gen Z, food inflation & other:

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A DAY IN THE LIFE:

Many if not most actions have consequences and many of them are unforeseen.

The government, for example, is suggesting that it will protect pubs by preventing their sale for alternative use. This could and probably will achieve the aim of keeping more pubs as pubs but, as the alternative use of the asset has been restricted, it should reduce capital values.

And in a world in which many pubcos are indebted and the banks are not indifferent to the carrying values of the assets against which their loans are secured, this is not without consequence.

Similarly, as York City Council now charges £18.00 to park for four hours, £22.10 for five at the weekend in order, presumably, to encourage people to use public transport and reduce congestion, it runs the risk of doing neither.

Indeed, with the parking at those kind of levels and with the buses at three quid a pop each way, it can kill off the idea of ‘popping into town’ entirely.

Alternatively, it pays to drive your family into town and then drive home again.

You can pop to B&Q or sit in the garden and then drive in later to pick them up because owning the car is a sunk cost and the petrol for the four single trips costs about £1.75. This will clog up the streets, discharge fumes into the atmosphere and annoy all concerned.

Anyway, with the steam rising at just the very thought of the above, let’s move quickly on to the news:

PUBS & RESTAURANTS:

Delivery & takeaway:

The latest NIQ Hospitality at Home Tracker reports that Britain’s top restaurant groups recorded fractional growth of 0.3% in delivery and takeaway sales in July. It notes that this is ‘the Tracker’s lowest figure since February, and the first sub-inflation growth since April.’ NIQ reports that ‘sales were softened by successive heatwaves in many parts of Britain in July, which led many consumers to step out of home to enjoy the sunshine.’ It would appear that this headwind overwhelmed what benefits may have flowed from the World Cup…

• NIQ reports that ‘restaurants’ deliveries were substantially stronger than pick-up orders. Delivery sales rose by 4.0% from July 2025, having been partly boosted by demand from consumers watching games in the men’s football World Cup at home.’

• The Tracker adds that ‘revenue from takeaway and click-and-collect orders slipped by 8.1% year-on-year. Growth in these channels has now been negative for 16 months in a row.’ The divergence in performance represents the continuation of an established trend.

• NIQ reports that ‘while combined like-for-like at-home sales are flat, the Tracker…shows much stronger growth on a total basis. Adding in delivery or takeaway sales from new restaurants, or ones where deliveries have been added in the last year, groups’ sales rose by 9.3% year-on-year.’ This does suggest that the market is growing in total sales terms but, as more units are involved, there will be additional cost and the impact on profitability is uncertain.

• Home orders ‘now account for nearly a fifth of all sales. Combined deliveries and takeaways generated 19.8% of spending with restaurants in July 2026, compared to 14.4% two years ago.’

• NIQ’s Karl Chessell says ‘strong topline growth in deliveries suggests positive trends for restaurants’ at-home sales. However, with takeaways sharply down, it’s clear that much of July’s extra revenue was generated by a combination of new delivery offers, higher menu prices and a short-term boost from the World Cup.’

• Taking the wider view, Mr Chessell says ‘overall sector sales in 2026 have been flat at best, so there are also concerns that deliveries and takeaways are cannibalising restaurants’ more profitable eat-in trading. Real-terms growth in all these channels is likely to remain extremely difficult for the rest of the year.’ The cannibalisation problem is a real one and, though it will impact profitability, from the point of view of the operator it is better to cannibalise oneself than it is to allow another operator to do it for you.

Deposit Return Scheme:

SIBA has called for the introduction of the deposit scheme to be delayed for at least a year because a ‘shocking lack of details’ has left them unprepared. SIBA says that the system could melt down ‘because of Wales’s failure to appoint an administrator or provide guidance on how their separate glass scheme would operate…’

• SIBA adds that the Welsh Government ‘also plan to include glass while the rest of the UK is focusing on cans and plastic bottles. However, no clarity has been provided on how the glass scheme will work’ and SIBA says ‘this could result in small breweries being doubled taxed in Wales.’

• SIBA CEO Andy Slee says ‘it feels like déjà vu on the Deposit Return Schemes, where a lack of clarity and different rules across the UK doomed the scheme in Scotland before it could even launch.’ He says ‘we want to see a DRS that works for all producers and consumers and the simplest way to do that would be to have the same scope and the same rules across the UK.’

Gen Z:

YouGov has undertaken a survey into Gen Z consumers’ attitudes towards eating out saying that 69% of Gen Z adults say eating out is a treat reserved for special moments and that 53% choose fast food restaurants. Not surprisingly, perhaps, fast food is the most popular restaurant type among Gen Z consumers…

• YouGov reports that 59% of Gen Z consumers ‘discover restaurants through recommendations from friends or family.’ It says that ‘treating restaurant visits as an occasion does not mean Gen Z adults are conservative about what they eat. Nearly three-quarters (74%) say they like to experience new food and cuisines, including 29% who definitely agree.’ YouGov says that ‘there is also demand for greater choice on menus’ and it says its findings ‘position dining out as both an indulgence and an opportunity for discovery, with variety and catering to dietary needs playing an important role in the experience.’

Other news:

The latest Buchler Phillips Hospitality Index reveals that hospitality insolvencies rose 10.2% in Q2 of 2026 compared to Q1, reports the MCA…

• The index suggests that some 840 companies found themselves in financial trouble over the three-month period. Some 1,602 accommodation and food service companies, including hotels, restaurants and pubs, closed in the six months to June 2026, down 6.1% from 1,706 for the first half of 2025.

• Jo Milner MD at Buchler Philips says ‘there may be some easing in the headline insolvency figures, but there is precious little breathing space for hospitality businesses.’ She says ‘margins remain wafer-thin, consumers are still watching what they spend and higher employment and operating costs continue to bite.’

Eating out participation. The MCA reports Lumina Intelligence data suggesting that eating out market participation fell by 6.2ppts, to 38.4%, in the 13 weeks to 28 June 2026, as consumers continued to be squeezed by the increasing cost of living…

• The data suggests that spend per visit has also fallen but it notes that ‘operators that provide speedy service enabling consumers to get in and out in under an hour are well-placed to gain custom.’ It says ‘limited-time-offers and trend-led flavour innovation help provide new experiences, appealing to the younger consumer and boosting performance of Burger King and McDonald’s. Further innovation in flavour twist can help brands remain relevant.’

Inflation. Food cost inflation fell in July leading the BRC to suggest that supermarkets are helping to protect their customers from the full impact of rising prices globally…

• BRC economist Harvir Dhillon says ‘by discounting everyday essentials and delivering value, retailers are actively shielding consumers from the inflationary headwinds sweeping through the economy’, Dhillon adds ‘if ministers can reduce the cost of doing business by slashing standing charges on energy bills, cutting the cost of employment and rebalancing the business rates burden away from retail, those savings can be passed directly to customers at the checkout.’

• Further up the food delivery chain, the Food & Drink Federation claims that it is its members who have the greatest impact with economist Liliana Danila saying that the drop in food price inflation is because ‘manufacturers have learnt from the previous energy shock brought on by the war in Ukraine, adapting contracts and diversifying suppliers to keep costs down.’

• Success, as they say, has many fathers. Failure is, on the other hand, fatherless.

Cheap eggs, salmonella: One person is reported to have died with hundreds taken ill as a result of an outbreak of salmonella related to eggs. Some 207 cases have been reported with 199 of those in England. Various reports have seemed to clear supermarket-bought eggs and attributed the outbreak to eggs bought in bulk for use in the hospitality industry.

COMPANY NEWS:

Diageo. The analysis of Diageo’s Report and Accounts continues with observers noting that, should he hit all targets set, CEO Sir Dave Lewis could make as much as £20m in the year to June 2027.

The MCA reports that Gail’s has launched on Uber Eats, with the rapid delivery partnership set to roll out to all stores in the coming weeks.

Restaurant Online reports that Little Caesars has quietly closed its only operating UK site in Greenford, west London, leaving its future plans in the UK in doubt.

HOLIDAYS & LEISURE TRAVEL:

Accountant RSM has produced its latest UK Hotels Tracker saying that ‘hoteliers were able to hike room rates in June as demand held strong, helped by the good weather, but profit margins stood still.’ It notes that ADR rose by 8% in London and it rose by 6% in the rest of the UK. REVPAR in London rose by 4.6% and in the provinces it was up by 5.2% suggesting that, in both cases, occupancy slipped a little…

• Chris Tate, partner and head of hotels at RSM UK, says ‘hoteliers are having to work a lot harder to maintain profits in London and see marginal growth in the UK. The hotel industry has proved to be resilient, helped by strong customer demand, which has allowed them to pass on the increase in costs.’

• Mr Tate acknowledges the need to maintain or even drive higher occupancy when he cautions ‘however, ever increasing room rates are not sustainable in the long-term, and hoteliers must tread carefully or risk putting consumers off as they look for cheaper alternatives.’

• He says that ‘the hot weather over summer has provided a boost to the industry and goes a long way in improving consumers’ moods, particularly combined with Andy Burnham’s initiatives to reduce the cost of living, which all helps towards putting a bit more money in people’s pockets. While the hotel industry may benefit in the short-term, the real challenge lies ahead when we enter the colder months and the rain returns, and consumers typically pull back on travel.”

Inbound tourism. Liverpool City’s visitor economy is reported to have generated some £6.8bn in revenue in 2025 due to strong growth in visitor numbers and tourism spending….

• Clearly disaggregating spend in hotels, pubs, restaurants and the like between local spend and that of visitors will be something of a challenge. And a significant proportion of overnight visitors will be in the city on business and, if they subsequently buy a pint, should that be included?

• Nonetheless, provided that the data are collected on a consistent basis, the information is useful and, as the latest independent STEAM tourism research found, visitor spend in the city rose by 9.3% year-on-year to hit the new record mentioned above. Tourism is estimated to support around 57,500 jobs in the region.

The CMA is to look into the pricing practices of Trainline and Virgin Atlantic as it investigates concerns that customers were not shown the total upfront price when buying tickets.

Dutch aparthotel brand The July is to welcome guests to its first site in Ireland, on Dublin’s Capel Street, on 15 October.

Uber Technologies has announced that it will team up with Verne and Pony AI Inc to launch autonomous rides on the Uber app in Zagreb. This is the first instance of autonomous vehicles being used in Europe.

OTHER LEISURE:

Meta court case. The California court case that sees 29 US states allege that Meta’s products have harmed children has been told that Meta has taken a ‘don’t ask, don’t tell’ strategy whereby it could ignore news that impacted its business model adversely, according to a whistleblower who testified against the company…

• The Guardian reports that Arturo Béjar, a former Meta safety engineer, told the jury that the company was aware of the harm its products caused children, which included its recommendations pushing content from sexual predators and violent and graphic images. He said he repeatedly raised the issue to various Facebook and Instagram executives but that they did little to resolve it.’

• The US states are pitching for up to $1,000 billion in damages and insist that Meta should change its business practices to make its products less addictive / attractive to children. It is likely that authorities in the EU, the UK and other territories such as Myanmar and Sri Lanka will be watching the case with interest.

Sky News reports that cinemas are considering a ban on Meta AI glasses amid piracy concerns. Industry trade body the UK Cinema Association suggests that the glasses could be used to tape films or parts thereof for illegal resale.

The Guardian reports that the Jeff Bezos consortium could be the majority shareholder in Liverpool Football Club within a year. The consortium, 1892 Holdings, has first refusal to buy shares should Fenway Sports Group decide to sell.

FINANCE & MARKETS:

Eurostat yesterday reported that the rate of CPI across the Eurozone had risen to 2.9% in the year to July, up from 2.8% in the year to June.

US President Donald Trump has said he will countries that help or do business with Iran will face ‘Tremendous Economic Consequences’.

Sterling mixed at €1.1655 and $1.3605. Oil little-changed at $91.67. UK 10 year gilt yield down 3 basis points at 5.04%. Equity markets mostly better yesterday & London set to open around 5 points higher as at 6.30am.

RETAIL WITH NICK BUBB:

• Today’s News: The JD Sports Q2 update this morning covers the 13 weeks to Aug 1st, but if investors thought that the World Cup would provide a boost, they will be badly disappointed, as the embattled CEO, Régis Schultz, says “Trading in the second quarter remained tough. The market stayed highly promotional, reflecting the consumer and footwear product cycle headwinds our industry has faced in recent quarters, whilst our core consumer was impacted by incremental cost-of-living pressures. North America saw the most acute impact, also reflecting a slower quarter for high-heat footwear product and the timing of ‘back-to-school’ demand”. LFL sales in the UK were just under 1% up, but the key North American business saw LFL sales slump by nearly 7% and overall LFL sales for the group were 3.1% down, which is way worse than expected and JD has warned that, given the underlying H1 sales
trends and the promotional market backdrop, ‘which may persist into H2’, they now anticipate that FY27 profit before tax and adjusting items will be in the range of £700m to £800m (previously £750m to £850m). 

• Today’s Press: In terms of the front-page News headlines, according to the press summary email from the Guardian, the Guardian itself leads with “Working in Starmer’s No 10 was unbearable, says ex-chief of staff”. The top story in the Times is “Vaccine for skin cancer helps fight off disease” and similarly for the i Paper which says “New skin vaccine can stop disease and offers hope for era of personalised jabs”. The FT’s take is “Moderna shares double after success for custom-made skin cancer vaccine”. Metro leads on “Refugee family who drowned in seaside tragedy”, while the Mirror writes “Day trip tragedy”. The Mail has “Ministers forced to tell asylum seekers: Don’t rape women”, and the Express says “Don’t rape or beat up women when in Britain”. Lastly, the Telegraph leads on “Harry’s coming home”, a report also carried by the Sun, which says “Harry & Meg coming home”.

• News Flow This Week: The Walmart Q2 results will be out at lunchtime today in the US. Tomorrow morning, we get the monthly GFK Consumer Confidence UK index (with the City expecting a dip from -17 to -18) and the ONS Retail Sales figures for July (with the City expecting seasonally adjusted sales volumes to dip by 0.5% month-on-month).