Performance Of Pubs And Restaurant Stocks Amid Likely Total Social Lockdown Plans

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 Performance Of Pubs And Restaurant Stocks Amid Likely Total Social Lockdown Plans

Summary

  • Ministers are working on an emergency plan to impose total social lockdown across parts of northern Britain and London, thereafter.
  • The households could also face restrictions on indoor socialising.
  • The shops, factories, and schools would be kept open.
  • The offices would not be asked to close for the staff who could not work from home.
  • The government has recently announced the 10 PM curfew for bars and restaurants.


It is likely that after imposing a 10 PM curfew on the pubs and restaurants, the government might order a complete shutdown to curb the rising Covid-19 infections. We track the stock performance of some of the stocks in the sector, including Mitchells & Butlers plc, J D Wetherspoon plc, and The City Pub Group plc to see their performance as the news unfolds and also bring key details of the likely announcement.

Government mulls crisis plans to impose total social lockdown

It is expected that there could be another complete social lockdown for around two weeks in which pubs and restaurants would be asked to pull down their shutters to the customers. Ministers are working on an emergency plan to bring into effect the lockdown restrictions across parts of northern Britain and most probably the capital city, London, could follow thereafter. The cabinet’s strategy committee was presented with a social lockdown option prior to the 10 PM curfew on bars and restaurants.

The plan could impose restrictions on the households as well from indoor socialising. Given the economic slowdown gripping the UK, shops, factories, and schools would be kept open. As the government has already advised continuance of work from home, wherever possible, offices would not be asked to close for the staff who could not work from home.

It is to be noted that Britain has been recording a considerable spike in Covid-19 infections and the third week of September 2020 ended with highest number of total Covid-10 positive cases over seven days. On 25 September 2020, the number of daily positive cases was 6,874, a new record for the UK.

However, the government did not implement the plan worrying that the public was not ready for another set of lockdown measures. Also, there was insufficient understanding about the likely impact of the second wave of infections. But, given the surge in infection rates in some parts of the country, stricter measures on social interaction might be required.

How are the leading pubs and restaurant stocks performing?

Mitchells & Butlers plc(LON: MAB) operates around 1700 restaurants and pubs in the UK & Germany. The pubs and restaurant company is known for providing its customers hygienic food & drink in addition to a pleasant service. Some of the company well-known brands are Harvester Ember Inns, Toby Carvery, Sizzling Pubs, O’Neill’s, ALEX, and All Bar One, among others. Mitchells & Butlers is into training services and provides industry specific training programs.

On 24 September 2020, Mitchells & Butlers announced its trading statement for the year ending 19 September 2020. The company’s total sales over the year to date decreased by 35.4 per cent mainly on the account of the closure period during the lockdown. In July 2020, there was a fall of around 32 per cent like-for-like sales. The sales in July got impacted by two factors - reduced capacity due to social distancing guidelines and fears from the consumers to visit restaurants and pubs.

However, the ‘eat out to help out’ scheme introduced by the government for the month of August 2020 along with the reduction in the value added tax (VAT) rates on some supplies helped the company’s business. There was a growth of 1.4 per cent in like-for-like sales. But, trading in the first three weeks of September 2020 was recorded to be lower, with 6.4 per cent decline in like-for-like sales. This fall in sales was before the recent introduction of additional restrictions on 10 PM curfew.

During mid-June 2020, the company announced revised financing to meet the challenges of the pandemic-led crisis. The company stated that it was comfortably placed to meet the future challenges, besides keeping itself at the front position of the eating and drinking-out market.

On 28 September 2020 the company’s stock (LON: MAB) traded at £140.60 up 3.70 per cent from its Friday’s close of £135.20.

J D Wetherspoon plc (LON: JDW) is a company that is running a chain of pubs across Britain. The company provides its customers with food and drinks at a cost-effective rate. The company ensures that its employees working at the outlets are well-trained and friendly to service the customers properly. The company’s pubs are individually designed and it aims to maintain them always in an excellent condition.

On 28 September 2020 the company’s stock (LON: JDW) traded at £877.00 up 5.02 per cent from its Friday’s close of £836.50.

The City Pub Group plc (LON: CPC) began functioning in later half of 2011. At present its portfolio comprises of around 47 outlets across the southern half of England and Wales. The company is well-known for employing top and qualified professionals at its outlets. It pays significant attention to make the environment inside its pubs relaxed and charming for its customers in addition to the food and beers that it serves.

(Source: Company website)

On 28 September 2020, the company said that it would announce its Interim results for the 26 weeks ended 28 June 2020 on 30 September 2020. The company came up with its audited results for the 52 weeks ended 29 December 2019 during mid-June 2020.

On 28 September 2020 the company’s stock (LON: CPC) traded at £58.00 down 0.86 per cent from its Friday’s close of £58.30.

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