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Tue 31st Jul 2018 - Update: JD Wetherspoon, Just Eat , Greggs, UKHospitality
JD Wetherspoon to cut prices for one day to highlight VAT disparity: Wetherspoon chairman Tim Martin is calling on pub and restaurant operators to show their support for a UK-wide Tax Equality Day on Thursday 13 September. And he has the backing of leading industry organisations, UK Hospitality and the British Beer and Pub Association (BBPA) who are calling on their members to join in too. Each of Wetherspoon’s pubs in England, Wales and Northern Ireland will be cutting the price of all food and drink by 7.5% on the day. Its pubs in Scotland will offer customers a 7.5% reduction on all food, soft drinks and hot drinks. Tax Equality day is aimed at highlighting the benefit of a VAT reduction in the hospitality industry. Prices at Wetherspoon pubs will be reduced for one day only, in order to show the benefits of a VAT cut. At present all food in pubs is subject to 20% VAT, compared to supermarkets which benefit from a zero VAT rate on the vast majority of food products. Martin said: “Pubs suffer a huge disadvantage paying about 16 pence in business rates per pint versus about two pence for supermarkets. In addition there is a huge VAT inequality and unfairness. A reduction in the level of VAT on a long-term basis will create a level playing field and generate growth and jobs in an important and vital industry – especially in beleaguered high streets. We’re aiming to make it the busiest day of the entire year in our pubs and would urge other pub and restaurant operators to participate too.” UK Hospitality chief executive Kate Nicholls, said: “Tax Equality Day is a great way to highlight just how hospitality businesses are disproportionately hit by VAT. The tax disparity between the hospitality sector and supermarkets is still far too high. Pubs are paying around a third of their turnover in tax compared to a fifth for big supermarkets able to sell alcohol at very cheap prices. A cut in the rate of VAT for the hospitality sector can help address this unfairness and allow pubs and bars to invest in their businesses and staff members. We hope that everyone will support this year’s Tax Equality Day and send a clear and unequivocal message to the Chancellor to give the sector the VAT cut it deserves.” BBPA chief executive Brigid Simmonds added: “Cutting the tax burden on pubs should be a top priority for the government. We welcome this Tax Equality Day initiative as a way of reminding customers that our pubs are over-taxed and we need action now to hold down the cost of going out. VAT reform is long overdue and beer duty and business rates are disproportionately high for pubs in the UK.” Nigel Evans MP for Ribble Valley said: “The hospitality campaign to recognise tax equality is a welcome and much anticipated event which now resonates with our national consciousness. This year’s Tax Equality Day has a special significance as it could be the final year before it achieves its goal as a result of the tax cutting freedoms which Brexit will endow the government with.”

Just Eat reports 45% rise in revenue in First Half: Just Eat has reported orders were up 30% to 104.4 million (H1 2017: 80.4 million) in the six month ended 30 June. Revenue rose 45% to £358.4 million (H1 2017: £246.6 million), up 46% on a constant currency basis. Profit before tax was down 3% to £48.1 million (H1 2017: £49.5 million) given costs associated with the acquisition of Hungryhouse. UK revenue was up 30% with Hungryhouse successfully migrated. Canada revenue was up 212%, or 227% at constant currency, driven by a strong performance from SkipTheDishes, Just Eat Canada merged with Skip. Australia revenue was down 8%, or down 2% at constant currency – Australia’s business transition to hybrid delivery is underway. International revenue up 36%, or 35% at constant currency driven by strong order growth in Italy, Spain and Mexico. Orders via app accounted for 54% of total orders (H1 2017: 46%). Chief executive Peter Plumb said: “The Just Eat Group served 24 million customers with 104 million takeaways through the group’s platforms around the world. Our increased investments in technology, brand and delivery are on track to make our service even easier to use, whilst expanding our customer’s choice. I’m pleased with the strong start to the year and excited by our opportunity to help many more people enjoy more of their takeaway moments through our platforms.” The company added: “This has been a strong first six months for the group, which has seen us add a net 11,400 restaurants and 5.6 million new customers. We sent our restaurant partners 104.4 million orders worth £2.0 billion, up 33% from £1.5 billion in the prior comparable period. Group revenue was £358.4 million, up 45% (H1 2017: £246.6 million), and up 46% at constant currency. uEbitda increased 12% to £82.7 million and we generated £77.2 million of cash from operations (H1 2017: £68.1 million). These results reflect increased investment, specifically in key areas such as marketing, technology and product development. These improvements are benefitting both sides of our marketplace and providing a solid platform for the launch of delivery services. Our non-UK businesses now account for 49% of group revenues (H1 2017: 43%) and we continue to see strong growth in the majority of those markets, with the exception of Australia where the launch of delivery is beginning to gain momentum. At our 2017 preliminary results announcement in March, we noted that 2018 would be a year when we would invest to grow and at our Capital Markets Day (“CMD”) in June, we outlined our vision to unlock the £57 billion market opportunity across our core geographies, with a further £26 billion in Latin America where we operate through our associate, iFood. It is this prize that created our ambition to serve every customer’s takeaway moment. At the CMD, we shared the knowledge that we had gained, and introduced the strategic pillars that underpin how the group intends to target this opportunity. These are to: Build our marketplace to be world-class; Engineer delivery services to complement our marketplace; and Lead a world-class digital global team, supporting extraordinary local customer experts. We have an opportunity and a plan to create a world-class customer experience, measured by top of mind awareness and Net Promotor Score, which at a group level increased by seven percentage points to 36 in the first six months of 2018. In respect of technology investment, in the first half we spent £46.7 million (H1 2017: £35.6 million) in improving both the customer and our restaurant partner experience. Building brands is a long-term commitment, and marketing spend over the First Half was £69.6 million up 29% on the comparable period (H1 2017: £54.0 million). App users are more loyal and order more frequently than other customers. We are rapidly improving the user experience of our apps to encourage increasing numbers of customers to connect with us through that channel. We are pleased to note that 54% of orders over the First Half were made via the app (H1 2017: 46%). Over the First Half, average order frequency across the group on an annualised basis improved to 8.1 (H1 2017: 8.0). We also added 11,400 net new restaurants onto our platform, with approximately 70% of our estate now being in tier 2-5 cities, reflecting the wide reach of our leading marketplace businesses. At our preliminary results in March, we committed to rolling out our restaurant device, Orderpad, to all restaurants. We’re pleased to note that as at 30 June, Orderpad was in 34,300 restaurants (H1 2017: 15,400), including 18,800 in UK restaurants. Orderpad provides significant benefits to all parties. The technology helps our restaurant partners run better businesses through greater control and insight, whilst offering the potential to improve customer service by enabling direct contact with restaurants rather than through our contact centres. Delivery revenue grew by 238% to £81.9 million (H1 2017: £24.2 million), representing 23% of group revenue (H1 2017: 10%). At constant currency, delivery revenue grew 249%. This was led by Canada where we are merging our Just Eat business with SkipTheDishes and, following further development of a French language version of the platform, we will leverage our existing marketplace business to bring the Skip business to Quebec during the second half. In the UK, we made significant progress in the First Half, expanding delivery services to major cities such as Leeds, Liverpool and Manchester. Our courier partners are able to deploy resource across non-competing industries and, consequently, pass on significantly reduced delivery costs and improved service times. At the beginning of April, we launched delivery services in Australia with strong collaboration between our Menulog, SkipTheDishes and technology teams. Whilst there remains more to do to emulate the full SkipTheDishes experience in Australia, by the end of June, we were live in seven delivery zones covering a population of 2 million people and are adding a new zone every ten days.”

Greggs reports like-for-likes up 1.5% in First Half: Greggs has reported total sales up 5.2% to £476m in its First Half to 30 June. Company-managed shop like-for-like sales were up 1.5% Underlying operating profit excluding property profits and exceptional charge was £25.7m (H1 2017: £27.6m), Reported pre-tax profit including property profits and exceptional charge £24.1m (H1 2017: £19.4m). The company reported resilient trading, despite extreme weather conditions, with continued growth in developing strategic categories including hot drinks, breakfast, healthier choices and hot food options, with strong demand for value meal deals which have been expanded to include: a broader £2 breakfast offer, now including yoghurts and fruit pots and a new £2 ‘pizza slice plus drink’ offer after 4pm. A total of 59 new shops opened, 25 closures; expect around 100 net new shops for the year as a whole. It reported an increasing presence in transport locations (1st Tube station at Westminster, 2nd Drive-Thru at Ashby-de-la-Zouch, Birmingham New Street station, Glasgow Buchanan bus station and East Midlands Airport). It had 1,888 shops trading as at 30 June 2018. Chief executive Roger Whiteside said: “Greggs has delivered a resilient performance despite challenging market conditions and we have continued to make good progress with our strategic investment programme to transform the business into the customers’ favourite for food-on-the-go. While we remain cautious in respect of the outlook for sales in the balance of the year given the consumer backdrop, we are confident in the medium and long-term growth potential for the business, supported by customers’ response to our initiatives, our strong cash generation and the ongoing strategic investments that we are making. Over the year as a whole we continue to believe that underlying profits (before exceptional costs) are likely to be at a similar level to 2017.” In it operatonal review, it added: “In the five years since we launched our strategic plan to focus on the growing food-on-the-go market we have radically reshaped the business making it better balanced and more efficient whilst focusing the business on those areas which will provide a platform for continued long-term growth in a rapidly changing retail environment. Our shop estate has been transformed to create an attractive food-on-the-go experience with relevant products, extended trading hours and seating, and a wide variety of location types offering convenient access wherever our customers are. We continue to grow and relocate our shop estate alongside investing in capacity in our internal supply chain. In the first half of 2018 we opened 59 new shops (including 19 franchised units) and closed 25 shops, giving a total of 1,888 shops (of which 219 are franchise units) trading at 30 June 2018. We opened our second ‘Drive-Thru’ shop at Ashby-de-la-Zouch and our first London Underground shop in Westminster Tube station, along with openings in other transport locations such as Birmingham New Street station, Glasgow Buchanan bus terminal and East Midlands Airport. All are performing well and contributing to the ongoing rebalancing of the Greggs estate. In 2013 only 20% of our shops served catchments outside of traditional shopping locations; today that figure is 35% and we anticipate that it will continue to grow to more than 50% in the longer term. Our pipeline of new shop opportunities remains strong and we expect around 100 net openings in the year as a whole, of which around 60 are anticipated to be with franchise partners. In recent years new product categories have been developed alongside traditional bakery favourites, providing more reasons to choose Greggs. We have continued to see strong growth in sales of hot drinks, breakfast, healthier choices and hot food, which increases the range of options for customers across the day. These ‘growth categories’ now account for 30% of sales (2013: 15%). Alongside product development our reputation for great value has been reinforced by providing market-leading meal deals across the range and day. Recently we expanded our longstanding £2 breakfast deal to include a broader offer, adding yoghurts and fruit pots, and have also introduced a new £2 ‘pizza slice + drink’ offer after 4pm. In May we launched our first vegan product, the Mexican Bean Wrap, and are well positioned to compete for sales in the months ahead with the launch of our autumn menu which will include a number of new hot sandwich options. Our investment programmes in improved systems and expansion of our internal supply chain are providing capacity for further growth whilst improving product quality and making the business more efficient. Recent activity has focused on the installation of a new manufacturing platform for doughnuts, internal relocation of our pizza production and the adaptation of our distribution capability to handle the transfer of products around the network. In addition, we are advancing plans for the additional distribution centre that we plan to build at Amesbury in Wiltshire in 2019.” Alongside this we continue to progress the investment programme to upgrade our processes and systems. Preparations are well advanced for the replacement of our human resource and payroll systems, along with the implementation of a new system for estate management that will support the changes to lease accounting in 2019.

UKHospitality – migration should not be political football: UKHospitality has reiterated its call for decisive government action on future immigration policy. The move follows publication of the Home Affairs Committee’s report on migration. The trade association also emphasised the UK’s future immigration policy should operate in the interests of the UK economy rather than as a politically driven target. UKHospitality chief executive Kate Nicholls said: “The report has rightly identified the need for an open debate on immigration and the need to take into account a range of views, not least UK businesses. The country’s future immigration policy should not be determined by a narrow ideological viewpoint, it should support the needs of the country and benefit the UK economy. We are hopeful the Migration Advisory Committee’s report will highlight the role migrant workers play and their importance, particularly to hospitality. Businesses will not have long to adjust to the new policy, whatever form it takes, so the government must act quickly to ensure employers are not left behind. The government also needs to ensure the management of immigration goes beyond just the numbers so it is managed in a way that benefits communities. Hospitality has made the case for the sector and will continue to do so as we approach the Brexit date.”

Social Media for Profit Masterclass open for bookings: Mark McCulloch, founder and group chief executive of WE ARE Spectacular and formerly of Pret A Manger and YO! Sushi, will welcome you to a social media boot camp with all-new content that will provide insights into how to build your sales and brand using social media. McCulloch will be joined by Alison Battisby, founder and director of social media consultancy Avocado Social. With almost ten years of social media experience, Battisby is a Facebook-accredited trainer and will bring the latest algorithm-busting insights to the afternoon. She will reveal the key trends you need to know – from Insta Stories stickers and IGTV to top hashtags and video hacks. Battisby will also reveal how Facebook, Instagram and Twitter algorithms work, what content is given priority and how you can get your posts seen by more people. She will also look at the best ways to use Facebook and Instagram ads to get a return for your business, including what makes a good advert and how to measure it. McCulloch will talk about designing your venue for Instagram and how to encourage user-generated content. He will also look at Instagram Stories and demonstrate the most interesting features and hacks to ensure your posts get seen. McCulloch will also talk about influencer marketing – does paying someone to post about your product really work? How are brands approaching influencer marketing and does the average customer trust a sponsored post on Instagram? There will also be a rundown of the ten key social media actions to take away. The half-day event takes place on the afternoon of Thursday, 13 September at One Moorgate Place in London. Tickets are £345 plus VAT for operators, £445 plus VAT for suppliers, and £295 plus VAT for Propel Premium subscribers. To book a place, email anne.steele@propelinfo.com or call 01444 817691.

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