Leading analyst Mark Brumby at Langton Capital says we are five years out of a recession, unemployment is down, real wages are in growth, interest rates remain low, utility, energy & grocery costs are falling & consumers have more cash available to them. But asks whether we are heading for overcapacity in the in the sector.
What it means for leisure:
Greene King Tracker yesterday (in what is admittedly a volatile series) said that eating out ££s were +13% in Jan v Jan last year. It also, unfortunately, suggested that total leisure spending was down 4% y-o-y.
Cash may be going elsewhere, perhaps into reducing debt or buying cars. Peach Tracker nonetheless reports total pub/restaurant spending +5.8% but LfLs only +1.4%
Interpreting the data:
Difference between total & LfL spending is the impact of new build.
The 4.4pps difference is nationwide; in London, the gap could be larger.
Should we be surprised that site-finding is tough, rents are rising, 25yr upward-only liabilities are compounding?
Fatburger has announced that it will enter the UK, Five Guys is here, Mexican outlets, some of them struggling, are opening left & right.
A tentative conclusion:
Everyone, but everyone, has to have their West End flagship, their 20 other London outlets, two in Brighton, four in Leeds etc.
Perhaps, just perhaps, this is not going to end well.
