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Morning Briefing for pub, restaurant and food wervice operators

Mon 6th Jun 2022 - Update: Low-alcohol and no-alcohol beer sales double, Whitbread pay revolt, rising bankruptcies, Soho House
UK sales of low-alcohol and no-alcohol beers almost double in five years: UK sales of low-alcohol and no-alcohol beers have almost doubled in five years as weaker versions of global brands such as Heineken and Budweiser helped convert drinkers from carbonated soft drinks. The FT reports drinkers in the UK bought $454m of alcohol-free and low-alcohol brews in 2021, up from $240m in 2016, according to research group IWSR, as they tapped into lower drinking rates among younger generations and fresh marketing drives by global brewers. This included $184m of “alcohol-free” beers, which have 0.5% ABV (alcohol by volume) or less, a figure more than triple the $52m of these products sold five years earlier, even though the overall beer market shrank. Trevor Stirling, analyst at Bernstein, said the country had become “one of the hotspots” for growth in low-alcohol and no-alcohol brewing. “It’s an adult soft drink rather than a substitute for alcohol…the acceptance of the products is probably higher than I was expecting,” Stirling said. UK innovations such as BrewDog’s Nanny State, launched in 2011, and Adnams’ Ghost Ship, launched in 2012, helped the UK market gain a head start, he said. Fernando Tennenbaum, chief financial officer of Anheuser-Busch InBev, said the world’s largest brewer was recording double-digit annual growth in low-alcohol and no-alcohol beers, with softer versions of brands including Budweiser, Corona, Becks and Leffe on sale in the UK. “Until five years ago no one was investing seriously in it [low and no alcohol],” he said. “We learned that it is better to have extensions of mainstream brands as opposed to developing new brands.” The technology is evolving, he said, with brewers now extracting alcohol from finished beer rather than halting the process midway. Low-alcohol and no-alcohol brews account for 3.1% of the UK’s beer market, IWSR said, compared with 2.7% globally. Heineken’s launch of the 0.0 version of its flagship brand in 2017 was a pivotal moment, analysts said, together with its decision to use the alcohol-free version as sponsor for the Uefa Europa League and Formula One.

Latest edition of The New Openings Database sent to Premium subscribers: The latest edition of The New Openings Database,which is produced in association with StarStock, was sent to Premium subscribers on Friday (3 June). It shows the details of 257 newly announced site openings and upcoming launches. The database shows the details of which company has opened a site or its plans to open one in the future. It has details on what type of site it is and its location. There is also a website link to the businesses so you can find out more about them. It is published on a monthly basis. Premium subscribers also received a 11,989-word report on the new additions to the database. Premium subscribers also receive access to three other databases. The latest Propel Multi-Site Database, which is produced in association with Virgate, contained 42 new companies, bringing the total number of businesses listed up to 2,481. The 140 sites run by those 42 new additions means the entire database of sites has reached 65,402 sites. Premium subscribers also received a 3,212-word report on the new businesses added. The go-to database provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. There is also a synopsis of what the business does and significant news associated with it. Premium subscribers also receive the Turnover & Profits Blue Book, which is produced in association with Mapal Group. The Blue Book, which is also updated every month, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers also have exclusive access to the UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and will be updated every two months. The second edition features 120 companies and almost 47,000 words of content, providing insight on the offer, locations, cost, business background, contacts and other key details. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email to upgrade your subscription. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

Whitbread faces pay revolt despite bosses’ decision to forfeit bonuses: The owner of the Premier Inn hotels chain faces a pay row for a second successive year after voting advisers opposed its decision to award bonuses to executives despite receiving government support during the pandemic. Sky News reports that Whitbread, the FTSE-100 leisure group, is engaged in discussions with leading investors aimed at heading off a substantial revolt at its annual meeting later this month. Whitbread shareholders have been told to vote against its remuneration report by Glass Lewis, a proxy adviser, while the Investment Association’s IVIS voting service issued a red-top notice, its strongest possible warning, saying institutions would “have to be satisfied with the company’s rationale for…bonus payouts”. The robust stance towards Whitbread comes despite Alison Brittain, its chief executive, voluntarily giving up a £729,000 deferred payout after deciding it would be inappropriate to take it in the context of furlough payments and other government support received by the company. The hotel operator also reduced bonuses for the year by 25% to reflect the fact that furlough funding was received only in one quarter of its financial year. ISS, another leading advisor to shareholders on AGM votes, has yet to issue its verdict ahead of the meeting, although a similar recommendation to those of Glass Lewis and IVIS would probably mean a hefty protest vote. People close to Whitbread said the restoration of its dividend during the financial year, the limited period in which it had taken government support and the use of forfeited executive bonuses to establish a hardship fund for other members of its workforce all mitigated against investor unrest. A Whitbread spokesperson said: “After a detailed review, carefully taking into account the views of shareholders in the consultation process, the remuneration committee continues to believe that the overall structure of Whitbread’s remuneration scheme aligns the interests of management with all stakeholders.”

A storm of bankruptcies is on the horizon, experts warn: As the storm clouds continue to darken over Britain’s economy, forcing companies and families to cut costs, at least one industry is gearing up for a boom in business. The Telegraph reports insolvency and restructuring specialists are preparing for a flurry of activity as supply chain issues, spiralling energy costs and rising inflation trigger a wave of corporate distress and bankruptcies. The signs are already ominous. During the first three months of the year, around 137,000 businesses closed their doors for good in the UK, a jump of nearly a quarter on the same period in 2021, according to the Office for National Statistics (ONS). There were also nearly 5,000 voluntary insolvencies in England and Wales – the highest level since the Insolvency Service launched its quarterly survey in 1960. And things are only expected to get worse. “On a logical basis, you would expect to see an increase in the need for companies to restructure and an uptick in insolvencies as covid support ends and the year goes on,” says Geoff Rowley, the chief executive of restructuring firm FRP Advisory. Rowley cautions that there is a “degree of uncertainty” about when an uptick in activity will occur, adding that FRP, which has worked on the administrations of Corbin & King and Carluccio’s, does not currently think there is a need to increase its headcount. Yet he expects there to be something of a “false dawn” during the summer before the real pain starts to be felt during the autumn. “That’s when it will start to affect everyone,” Rowley says. Glen Flannery, a restructuring and insolvency partner at City law firm CMS, says: “We’ve already seen a spike in failures in more vulnerable sectors such as construction and energy retailing. The impact in other sectors has been less pronounced, but the number of corporate failures has been trending upwards across the board as pandemic-related government support has been withdrawn.” FRP’s Rowley believes the crisis in retail and hospitality could be particularly acute. He says: “Hospitality has had a bounce back post-pandemic, but consumers will be looking to tighten their belts in the autumn, especially when energy bills rise again in October.” CMS’s Flannery agrees. “Many consumer-facing businesses, such as hospitality and leisure, have been experiencing a resurgence from pent-up demand following the abolition of covid restrictions. However, this is predicted to soften as the sharp squeeze on household disposable incomes bites.”

Cost of living crisis ‘a bigger threat to firms than pandemic’: A fifth of companies expect that the cost-of-living crisis will be worse for their business than the pandemic, a new survey has found. The Times reports the biggest threats facing businesses over the next six months are rising energy costs and inflation and disruptions to the supply chain, which have been worsened by lockdowns in China, according to a survey of 500 leaders of medium-sized businesses by BDO, the accounting and business advisory firm. The Bank of England has warned that inflation could exceed 10% in October, well above its target of 2%. 60% of businesses surveyed have planned for a rate of 6% or less in the current financial year. More than a quarter have increased prices to rebuild margins and a fifth have paused their investment plans. Ed Dwan, partner at BDO, warned that the survey was “deeply troubling”. He said: “For many, the rise in national insurance contributions has been a tipping point — resulting in an increase in salaries that could well exacerbate inflation and the pressures facing businesses right now”. The number of businesses that went bankrupt in April was almost double the level recorded a year ago, when the furlough scheme was still in place, and about 40% than pre-pandemic levels, the latest government figures show. The consumer prices index, which is the headline measure of inflation, hit a 40-year high of 9% in April led by a sharp rise in the price of energy, fuel and food.

Soho House opens two more homeware stores: The Membership Collective Group, which owns Soho House, plans to open two more of its Soho.Home.Studio homeware stores this summer. The Times reports the outlets, in Westbourne Grove in west London and Melrose Avenue in Los Angeles, will double its store portfolio to four. Last year the group opened a store in New York and another on the King’s Road in Chelsea, also in west London. The stores offer interior design services and a programme of workshops and events, as well as selling homeware. Andrew Carnie, president of the group, said: “These two new locations reflect our confidence in the strength of our aspirational home and interiors business.” The group, which began life with the first Soho House members’ club in 1995, was listed in New York in July last year. It has 33 Soho Houses around the world, the Ned hotel in the City of London and the Scorpios beach club on the Greek island of Mykonos.

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