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Mon 13th Jun 2022 - Update: Household spending warning, UK food review
New warning from CBI on household spending: British household spending will shrink next year, the CBI has warned, as it called on the government to take measures to stimulate business investment to prevent a wider economic downturn. The Times reported the organisation’s latest economic forecast slashes growth this year and next and predicts that household spending will turn negative next year as a result of surging inflation squeezing living standards. The business lobby group, which represents 190,000 companies, predicted the economy will grow by 3.7% this year, down from an earlier projection of 5.5%, and by only 1% in 2023. Rain Newton-Smith, chief economist at the CBI, said the UK was struggling to cope with a “toxic recipe” of shocks. “This is a tough set of statistics to stomach,” she said. “War in Ukraine, a global pandemic, continued strains on supply chains, all preceded by Brexit. Productivity is flatlining with wages unable to keep up with inflation.” The CBI expected a technical recession, defined as two negative quarters of economic growth, will be avoided largely as a result of growth in business investment, spurred by the government’s super deduction tax break that is to end next year. The CBI estimated capital investment will grow by 4.1% this year but fall to 1% next year when the deduction ends. Investment growth will turn negative by the end of next year, the forecast warned. The CBI is urging chancellor Rishi Sunak to provide a permanent successor to the super deduction to help to increase the country’s chronically low business investment, the worst among the G7 economies. Newton-Smith said a permanent investment tax break would lead to additional investment of £40bn annually by 2026, putting the UK ahead of its peers such as Canada and Italy. She said: “This would help put up growth significantly beyond a 1% forecast in 2023.”

Next edition of Propel Turnover & Profits Blue Book shows sector losses outstripping profits almost six times over: The damage done to the industry by the pandemic is highlighted in the latest edition of the Propel Turnover & Profits Blue Book with losses outstripping profits in the sector almost six times over. The Blue Book, which is updated monthly, shows 348 companies making a combined loss of £5.9bn compared with 241 companies in profit – making a combined £1.1bn. Premium subscribers will receive the latest edition of the Blue Book, which is produced in association with Mapal Group, on Friday (17 June). The 589 UK pub, restaurant, cafe and hotel operators featured have a total turnover of £28.6bn. The Blue Book, which is updated every month, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers also receive the New Openings Database, produced in association with StarStock, and the Multi-Site Operators Database, produced in association with Virgate, which are also updated each month. Premium subscribers also now have 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. 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 have also been given exclusive access to seven videos where sector leaders and entrepreneurs offer their insights as they develop their businesses in a post-covid world. The videos, which were sent on Friday (10 June), include Paul Campbell, sector investor and non-executive director at Hawksmoor, Vinoteca, Hickory’s, Blacklock, Tortilla and The Alchemist; Colin Hill, chief executive of Nando’s UK; James Shapland, co-founder of Coffee#1, the Caffe Nero-owned brand, and new venture Coffi Lab; Jyotin Sethi, co-founder of JKS Restaurants; Jonny Boud, founder of Kitchen Ventures and Tom Snellock, founder of Clays. The videos also include a panel session on solving the staffing, recruitment and retention crisis hosted by Mark Stretton with James Hacon, global chief marketing officer at Mapal Group; Sol Schlagman, co-founder of Stint; Roland Horne, founder of WatchHouse; Kate Daines, chief people officer at PizzaExpress; and Brian Trollop, managing director at Dishoom. 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.

Henry Dimbelby calls for ‘much bolder’ action in UK food review: Henry Dimbleby, the founder of natural fast food brand Leon and head of a landmark review of England’s food system, has called for “much bolder” action to address climate change and obesity after government proposals focused on production were attacked by campaign groups. “We’re moving forward but it’s not radical enough,” said Dimbleby, who has produced two government-commissioned independent reports. He called for new measures and targets to be enshrined in law, and told the FT: “We need to be much bolder if we’re going to shift the food system into a different mode of production. I think at the moment the unsustainable food system is going to cause much more harm than it needs to before it changes.” Ministers have unveiled a food strategy white paper responding to Dimbleby’s review, but it has been met with disappointment by organisations such as Greenpeace and the Soil Association, which called its approach “really negligent”. Dimbleby said around half of his ideas had been taken up, including the proposal to produce a framework setting out how different areas of English land should be used – a move he said was an “absolutely critical part of the environmental transition”. He said he was pleased to see ministers adopt his advice to establish a food data service and require at least half of food procured for the public sector to be cultivated locally or to higher standards, such as organic. “On the environment it definitely takes us forward but there is a big gap still on trade, where they haven’t explained how they are going to protect our standards from cheap imports,” he said. “A lot of this stuff needs to be put into statute for it to work.” New legislation should include targets for health, environmental progress and food production levels and should be monitored by an independent body like the Climate Change Committee, Dimbleby said. The strategy does not propose a statutory framework, saying ministers believe they have “existing powers in primary legislation” to implement changes. It also ignores proposed targets such as a 30% cut in meat consumption by 2032 and does not guarantee farm subsidies until 2029, as Dimbleby advised. Further measures are expected in a health disparities white paper, but Dimbleby said he was not optimistic that taxes on salt and sugar proposed in his review would feature. He said officials thought it was “not politically possible”.

Former McDonald’s restaurants in Russia begin reopening under new brand: Former McDonald’s restaurants in Russia have begun reopening under a new name. McDonald’s agreed last month to sell its Russian business to Alexander Govor, a local franchisee of the chain in Siberia who has taken over the portfolio of roughly 850 restaurants. Rebranded as Vkusno & Tochka, or “Tasty – Full Stop”, 15 restaurants in Moscow reopened yesterday (Sunday, 12 June). The new owners are expected to open another 50 restaurants today (Monday, 13 June). By the end of the month they are aiming to have 200 reopened. It is not just the name that has changed, with the word “Mac” being removed from the new menu. Vkusno & Tochka said it intends to make changes to the menu but keep the taste the same for Russians who were first acquainted with McDonald’s when the group entered the country in 1990. After initially suspending its operations in March, McDonald’s said in May the invasion of Ukraine meant it was “no longer tenable” to operate in Russia. The company had been spending about $55m a month on rent and wages for its 62,000 Russian employees before selling the operations. Govor is required to keep the staff and their current work agreements intact for at least two years, according to Russian media reports. Govor has said the rebranded business expects to expand to 1,000 restaurants within the next five to six years. What was once the Russian website of the US fast-food chain has removed all references to McDonald’s and now redirects to the website, which translates as “there will be burgers here”. The restaurant’s logo has also been changed to a small red burger with two tiled French fries. McDonald’s withdrawal from Russia was its first from a major market and left the group with a non-cash charge of as much as $1.4bn.

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