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Fri 10th Apr 2020 - Government's landlord warning, foodservice pricing at 12-month low, mentoring scheme et al
Government considering action against landlords not supporting tenants: The government is considering taking action against landlords that are placing unreasonable demands on their tenants and pursuing other means of debt recovery. Propel understands a communication between the office of business secretary Alok Sharma and leading sector operators, said he was aware this was happening in some cases and is considering what further action may need to be taken against said landlords. It is thought the government may lean on said landlords to come in line with the measures it has implemented to support businesses leasing premises – providing for rent deferrals of three months and a degree of protection against enforcement in the event of non-payment of rent, before looking to take stronger action. At the time of setting out these measures, the government was clear it expected landlords to respond in a way that was in keeping, “but also within the spirit, of these measures”. Over the past two weeks, a number of examples have been highlighted of some landlords threatening legal action against hospitality businesses after the majority withheld rent to save cash during the lock-down. Last month, it was reported Pho, Escape Hunt and Caffe Concerto were among those that had been threatened with action. A leading sector operator told Propel: “This communication from the government should be a warning to those landlords that are still threatening tenants they need to come in to line. Businesses in our sector, and in other sectors, will remember those who didn’t respond in the right way during this crisis, and they may have a rude awakening when the world returns to some normality. It is hoped with some prompting from the government they will act differently.” Last month, the FT reported Caffe Concerto, which operates 37 sites in the UK, faced a winding-up petition from Criterion Capital, owner of its Haymarket site, after it did not pay a £100,000 rent bill. At the time, Andrew Sell, head of asset management at Criterion Capital said: “The government at no time has said commercial tenants should receive a rental holiday, yet many, but not all, are choosing to withhold rent. Such action is jeopardising our obligation to meet our commitments to lenders.” Last month, London Union chief executive Jonathan Downey, who is campaigning alongside UKHospitality for government sector concessions, reiterated calls for a six-month debt enforcement moratorium and urged operators not to be bullied into paying their rent. Earlier this week, Downey said the industry should be seeking a national nine-month rent free measure. 

Food and beverage inflation lowest for 12 months but pricing uncertainty looms: Foodservice pricing reached its lowest point for 12 months in February with the majority of categories showing no or minimal inflation, according to the latest Foodservice Price Index from CGA and Prestige Purchasing. However, with the coronavirus prompting shut-downs across industries worldwide, the index has warned pricing will be volatile in the coming months. There was also a warning while many operators are currently closed, buyers will need to be prepared for a different landscape both in supply and demand once they are up and running again. Categories already impacted by the coronavirus pandemic include soft drinks, where large manufacturers such as Coca-Cola have seen delays to artificial sweetener shipments—leading to predictions of tighter supplies of drinks in the longer term should Chinese operations remain restricted. At the same time, some categories are seeing large price reductions in the early weeks of the pandemic, including fish and seafood. With demand from China slowing dramatically, Norway's export market has diminished, causing oversupply and a drop in salmon spot prices. The sugar category meanwhile recorded a small rise in pricing in February, partly due to a 24% drop in India’s sugar output after a prolonged drought followed by flooding. With India in lock-down during its main sugar harvest, a further tightening of supply on a global scale is now expected. 

Hospitality experts sign up to pro-bono mentoring scheme: Rare Restaurants chief executive Martin Williams, the Gaucho owner’s chairman Jamie Mitchell and former Obikà and Itsu chief executive David Haimes have teamed up with a group of 30 cross-sector leaders to create All Together – a new initiative that offers “pro bono” mentoring and advice for company founders and leaders affected by the coronavirus crisis. The free service, which also covers sectors including technology, consumer goods, retail, venture capital, engineering and manufacturing, is open to all business leaders and owners of small and medium-sized enterprises with annual revenues between £5m and £100m. It is also seeking more experienced hospitality bosses to provide mentoring. Williams said: “These are extraordinary times, for society and for our business community. Chief executives and business owners today are making critical decisions that will determine not only their ability to survive this unprecedented crisis, but the sort of business they will be once the economy starts to recover. While many in hospitality are offering support, I have always found cross-sector advice to be more objective and empathetic. All Together offers both specialist sector advice and mentoring opportunities from other industries. This is a time when hospitality leaders need to step up, give support, job security and create a community for their colleagues; There have been too many red faces from hospitality ‘leaders’ in the past few weeks – It’s now time to support each other and truly be ‘all together’!”

Star Pubs & Bars providing rent relief on individual basis: Heineken-owned Star Pubs & Bars has said it is providing rent relief to licensees on an individual basis. Managing director Lawson Mountstevens said: “We are and will continue to do as much as we can to help our pubs. In addition to all the government’s support and grants to help cover rent, salaries and other fixed costs, Star Pubs & Bars will provide rent relief to pubs on an individual basis and will suspend the collection of the revised rent until at least June – or pubs reopen. Once the restrictions are lifted, we want to see all of our pubs open, trading and operating as viable businesses as soon as possible. We know the rent relief we are providing on a pub-by-pub basis, which represents a significant investment on behalf of Star Pubs & Bars during challenging times for the whole industry, will have a significant bearing on the future sustainability of our licensees’ businesses – and clearly we want to see our pubs thrive in the long-term.”

Diageo warns pub shut-down badly hitting sales: Diageo has warned the speed of the shut-down across the world is hitting the business even harder than before. Bosses highlighted several areas that have worsened in the past month following widespread lock-downs across the globe. They also put on hold a share buyback scheme and scrapped advertising and promotional spending on brands the company said “will not be effective in the current environment”, although it did not say which ones remain effective. In a trading statement, the company added: “Widespread containment actions put in place by governments across the globe in March, including the closure of bars and restaurants, are having a significant impact on the performance of our business. Social distancing measures, including the closure of the on-trade channels, have been introduced in most of our markets. We are tracking changes in consumer behaviour during this time and adjusting our plans and resources in response.” There has been a boost in sales through supermarkets, but the firm cautioned over whether it can be sustained in the longer term. The significant impact on global travel retail, referred to in its February update, has extended beyond Asia Pacific into other markets. Elsewhere it said: “In mainland China, we are beginning to see a very slow return of on-trade consumption, as restaurants and bars have started to gradually reopen.” Two production sites in Nigeria have also been shut, and significant impact to the business was highlighted in North America, India, Latin America and the Caribbean. Despite the difficulties, Diageo said it was donating alcohol to make more than eight million bottles of sanitiser for front line healthcare workers around the world, along with support packages for bar staff hit by closures.

Merlin creates a ‘A-Z of entertainment’ for families at Easter: Merlin Entertainments has created an A-Z of activities and entertainment for families in lock-down this Easter with a range of videos, educational packs and live Facebook streaming all taking place. With many of their attractions and resorts temporarily closed, Merlin said its staff who are working from home, caring for animals or looking after critical maintenance, have pulled together to help build a range of fun activities and videos to entertain families over the Easter holiday period. Activities range from a special “History Unlocked” series at the 1,000-year old Warwick Castle, to live lego build lessons and question and answer sessions with a range of Sealife aquarists. Mark Fisher, chief development officer at Merlin, said: “Merlin’s DNA is about delivering fun and entertainment to families. Just because, sadly, the physical doors to our attractions are shut this will not stop us from offering families amazing, memorable experiences.”

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