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Morning Briefing for pub, restaurant and food wervice operators

Wed 31st Aug 2022 - Update: Just half of Britain's ten biggest cities in growth, Fulham Shore trading, JD Wetherspoon et al
Just half of Britain's ten biggest cities in growth as sales momentum slows: Out-of-home food and drink sales are in growth in just half of Britain’s ten biggest city centres, the latest Top Cities report from CGA and Wireless Social shows. The joint “Top Cities” report combines CGA’s sales data with device log-in data from Wireless Social to provide a “vibrancy” ranking of Britain’s ten most populous cities over the four weeks to 30 July 2022. While sales are flat in the latest period of measurement, in light of inflation they are falling below in real terms as the hospitality sector builds back while facing new challenges. Sales across the top five cities in the vibrancy rankings for July were between 0.2% to 6.2% higher than in the corresponding four-week period in 2019, however for the first time since the first report in January, the data shows five cities in total experiencing negative sales versus the same time period in 2019. Glasgow once again takes the number one spot on the list of most vibrant cities, primarily driven by sales performance – however with inflation at nearly 11%, it will be difficult for this to constitute growth in real terms, which is the case for each city in the report. The latest report also saw last month’s top city of Leicester drop to fifth place, with Birmingham demonstrating a performance closer to its higher rankings seen in February and April as it climbed from fifth to second in the latest period. Meanwhile Bristol has continued to rank highly, driven by increased log-ins in the latest four weeks which has contributed to its overall vibrancy ranking position of third. London’s vibrancy was once again towards the bottom of the list, however during this period this was mainly driven by a negative sales performance (minus 7% versus 2019), rather than guest log-ins. With the capital seeing an influx of tourists over its peak period, this is likely why London has instead seen a spike in log-ins. CGA client director Chris Jeffrey said: “Following its performance in the first half of the year, it’s no surprise to see Glasgow back on top and it’s promising to see Birmingham climb back into second position. However, it’s clear that despite the sales growth seen across some cities, the sector is still facing substantial challenges in the form of inflation, rising costs, staffing shortages and supply chain issues. With half of the cities on the vibrancy ranking report seeing negative sales versus 2019 for the first time since January and cost of living concerns beginning to impact consumer spending, it looks likely that challenging trading conditions will continue to affect the sector.” Julian Ross, founder and chief executive of Wireless Social, said: “While it’s encouraging to see growth in some parts of the country, the economic climate continues to be extremely concerning for hospitality businesses. The cost-of living and energy crises rage on, with seemingly no clear objectives or support measures in place or even on the table – without this intervention, the industry is heading for an extremely bleak autumn and winter. Support for our sector is desperately needed, and it’s needed now.”

Number of experiential concepts to feature in next edition of The New Openings Database, 14,300-word report included: A number of experiential concepts will feature in the next edition of The New Openings Database, which is produced in association with StarStock. The database will show the details of 315 newly announced site openings and upcoming launches for Premium subscribers when it is published on Friday (2 September), at midday. The database shows the details of which company has opened a site or its plans to open one in the future. It will have details on what type of site it is and its location. There will also be a website link to the businesses so you can find out more about them. It is published on a monthly basis. The next edition features boutique bowling company Lane7, which is set to open two new venues called Level X, at the St Enoch Centre in Glasgow and Captain Cook Square in Middlesbrough. Also added this month is Steampunk-themed experiential concept Phantom Peak, founded by Nick Moran, which has opened in London’s Canada Street. In addition, Flight Club, the darts concept owned by Red Engine, which plans to open in Cardiff’s St Mary Street this autumn and Glasgow in the autumn of 2023, will be featured. Meanwhile, crazy golf brand Plonk, which was founded by Elliot Scott, and has launched a new flagship site in Borough Market, is included. Premium subscribers will also receive a 14,300-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, was sent to Premium subscribers last Friday (26 August). The database contained 47 new companies, bringing the total number of businesses listed up to 2,617. The 293 sites run by those 47 new additions means the entire database of sites has reached 66,609 sites. Premium subscribers also received a 3,200-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, and 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. 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.

Fulham Shore – trading running in line with management expectations: Fulham Shore, the Franco Manca and The Real Greek owner, has said despite the turmoil in the UK economy and the recent sporadic train and tube disruption, its trading is “resilient and running in line with management expectations”. The company said all of its new restaurant openings are being “well received and are also performing in line with expectations”. So far, during the group's current financial year ending March 2023, it has opened nine Franco Manca restaurants, the most recent being in Windsor, and one The Real Greek in Newcastle. This takes the total number of restaurants operated by the group to 90. During this time, it has also relocated its Franco Manca restaurant in Tottenham Court Road, London. Fitting out works are ongoing at four new Franco Manca sites – in Cardiff, its first in Wales; Chichester; Hove; and Lincoln. The Real Greek has two restaurants being constructed – in Gloucester Quays and Touchwood, Solihull, and has exchanged contracts for a new restaurant in the St James' Quarter Edinburgh. The company said it continues to be on track to deliver 18 new restaurants in the current financial year. The company's net cash position before lease liabilities at 30 August 2022 was £4.7m. The group said it has undrawn bank facilities of £15.9m, providing “substantial financial headroom” of more than £20m. David Page, executive chairman, said: "Franco Manca and The Real Greek continue to operate busy restaurants. Our customers are attracted by our high-quality ingredients and great prices. Despite the disruption caused by rail strikes our restaurants old and new provide a great space for people to meet and enjoy time with family, friends and colleagues.”

JD Wetherspoon sites to remain open at all times in wake of energy crisis: JD Wetherspoon has said it will keep its 851 pubs and 57 hotels open for their normal hours, despite the impact of rising energy costs on the hospitality sector. The company said the average trading hours of each of the pubs are from 8am until midnight seven days a week. JD Wetherspoon founder and chairman Tim Martin said: “We are aware of reports that say some pubs might be forced to close or only open certain hours. We understand the very difficult predicament that some pubs and restaurants face with hugely rising overheads including, but not only, energy costs. We fully respect the difficult decisions that some pubs and restaurants will have to make but Wetherspoon is committed to keeping all our pubs and hotels open for their normal hours.”

Get ready for 22% inflation, Goldman Sachs warns: Inflation in Britain could top 22% on the back of high energy costs next year, Goldman Sachs has warned, as new data showed that consumers are paying record prices in the shops. The Times reported inflation, which is already in double figures at 10.1%, could more than double and peak at 22.4% early next year if the Ofgem price cap rises by 80% in January, the US investment bank said. The forecast is based on record natural gas prices, which have risen by 90% this month alone, though they fell yesterday (Tuesday, 30 August). Goldman’s projection tops the 18.6% consumer price inflation peak predicted by the US investment bank Citigroup and is far higher than the Bank of England’s expectation of a 13.3% peak this October, in forecasts made at the start of this month. “Wholesale gas prices in the UK have surged by 145% since the start of July and while our commodity strategists do not expect the recent spike in European gas prices to persist, we view persistently higher gas prices as an upside risk to our forecast for the Ofgem price cap increase in January,” Sven Jari Stehn, chief European economist at Goldman, said. August figures from the British Retail Consortium showed monthly shop-price inflation of 5.1 in August, the highest since the index began in 2005. The price of fresh food climbed most, up 10.5% compared with the same month last year.

Business confidence at lowest since last lockdown: Confidence among British businesses is at its lowest since the third national lockdown in early 2021 after a further drop in August. The Times reported rapidly rising inflation means only a net 16% of management teams are confident about their prospects for the year ahead, according to Lloyds Bank’s latest Business Barometer. That compares with 25% in July and a long-term average of 28%. It is the third month in a row that confidence has faded. The last time the reading was this low was in March last year when the country was under lockdown for the third time. In its survey of 1,200 companies, Lloyds found inflation, especially of raw materials and energy costs, was by some way the biggest concern. More than two thirds of businesses said that surging prices of everything from electricity to steel worried them the most. In response to rising input costs, 56% of bosses expect they will have to increase their prices over the next 12 months. The next most pressing issue was slowing economic growth both at home and globally, with close to 40% of respondents highlighting that as a concern. Reflecting the growing headwinds, less than half of businesses now expect to see their trading prospects improve over the next 12 months. Before, more firms than not thought their trading would pick up. The number of companies expressing confidence in the wider economy also slipped. Despite the challenges, many companies are looking to hire new workers. More than a third of those surveyed said they expected to increase their headcount next year, although salary increase expectations are stabilising. In July, 28% of businesses thought they would have to give pay rises of at least 3% this year, but that has fallen back slightly to 26%.

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