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I think MARS will remain volatile for time being.
There are simply too many uncertainties at the moment from rising COVID-19 cases to poor trading in many pubs.
All things being equal, in the medium to long term this could be performing much better. However, I think that those who expect to make a quick and easy profit will be disappointed.
I think that the main reason for ;low; pubco valuations is very simple: current problems with the hospitality sector. Top of this there's a seasonal effect. Holidays are over but, on the other hand, the party season hasn't started yet.
Where I live many pubs are calling last orders before 10pm on weekdays, some are closed altogether on Mondays and Tuesdays. This just wasn't the case before the pandemic.
I was in Camden, London last week. I visited one of my favourite pubs in the area. Ok, it was a Tuesday afternoon, hence not the busiest time but there were just four customer including myself.
Why blame barrow boys when we should blame the government?
BoJo's handling of the pandemic has been a disaster for the hospitality sector. His decision to order pubs to close at 10pm a year ago was supposed to allow them to be open.... Yet where I live they were closed for over five months (well over six if I exclude the outdoor opening in April).
I've heard a few people saying that they just realised how much money they were saving when the pubs were closed and got used to drinking at home instead. Not great but that's the way it is.
"I think that people have woken up to the fact that if hospitality have to pay “fair” wages that the price of a pint will be raising to £7-£9 which is not going to be acceptable to UK customers. What does M&B do in this situation? Continue to pay low wages and have poor customer service and early closures or up salaries and prices and see what happens?"
I visited one of my regular spots a couple of days ago.
To my surprise, prices had gone down. A large class of wine had been reduced from £6.20 to £5.50. Beers on tap had also been reduced by almost 10%. They are now doing Camden Hells for £4.20.
Where I live, people are clearly not prepared to pay £5 for a pint. Anyone charging £7 for a pint would go out of business in a matter of weeks.
In London and some other more affluent parts of the country £7 could be feasible. However, I doubt that many people would be happy to pay £9. Majority would just choose to drink at home.
This share has lost about 25% since the pubs first reopened.
Many posters keep on saying how well the hospitality sector is doing. However, if it;s doing so well, we are not seeing it in share prices of MAB or Marstons.
As I hold shares in both, it would be in my interest if these shares rose.
Unfortunately I think it is likely to be a bit of a rocky road.
I still think that the hospitality sector as a whole is much weaker than many think or would like to believe, therefore shares like MAB and Marstons struggling.
I visited two local pubs last night. In one of them, there were just two customers (including myself) at 8.30pm. I then moved on to another pub which was showing the Man Utd v Villa Real match. Busier but nowhere near what it would have been two years ago on a match night. Last orders were at 10pm.
I was in Richmond in SW London last week. Pubs were much busier than where I live but it was the upmarket Young's that attracted most punters, despite charging well over £6 for a pint. MAB Nicholsons looked pretty empty.
My recent experience @ All Bar One in both Leeds and Newcastle has been that the trade still isn't great. Both Leeds and Newcastle seemed to me more quiet than they were before the pandemic though I was visiting in the middle of the week so perhaps trade is much better on weekends?
It looks like BoJo's policies, particularly the last prolonged lockdown, has changed the way how people socialise. From my experience, many local pubs are busier earlier in the day and more people are eating. This could help MAB in the long term as their business model is largely food-related.
I live in a small town just outside Greater Manchester. I moved here from London about six years ago. During that time seven new licensed premises have opened and just one closed, while in my former North London suburb pubs were generally closing down.
Therefore, over-supply of licensed premises may play a role here, hence rather challenging trading in most places.
Marstons share price performance has been very disappointing recently, as has MAB and many other pub companies. Market doesn't seem to think that these companies are worth more right now.
I am holding on to my shares as I don't sell at a loss. Having said that, I'm hoping for some sort of recovery soon (but I;m not convinced).
Ironically, many pub shares were higher during the lockdown than now.
Right now, Masrstons share price is disappointing. I've been adding at about 80p, my average price being just below 87p. Having said that, it looks like a long way to break even, yet alone to reach 100p.
Equally, MAB is quite disappointing right now. After selling just over half of my holding @ 288p (with a decent profit), I feel it's too early to start buying back.
I think Christmas period will be crucial. It looks like people are not going out like they used to at the moment. My guess is that there's much less disposable money available than many people think. Employment is not great in many sectors and those ones that are currently recruiting typically have low paid jobs. At the same time, prices are going up like crazy.
Took some profits today by reducing my MAB holding by just over 50%.
I feel that it will be some time before the hospitality sector recovers. MAB is now well below its pre 17 May when it was trading at around 320p. If this falls below 240p I will look to buy back, otherwise I will just stick with my remaining shares.
I have been recently adding Marstons, my average now being 87p. In case of Marstons, my target price is 100p.
One of the biggest problems with SSP is that they really don't seem to be living in a real world.
James Martin's Kitchen at Manchester Piccadilly charges £4.29 for a vegan sausage roll!
There's a Greggs just outside the station where it is £1. Ok, not fully comparable but the JMK sausage roll is not worth over four times of the Greggs!
I could give other examples. Someone said that these are low margin products. I don't think so. Margins are sky high but if people are not actually prepared to pay the prices it doesn't matter, they are still struggling.
I hate to imagine the waste SSP generates.
I have quite a few shares and I'm not prepared to sell at the current value. However, I think that the management needs to take a good look at the products and the prices they are charging. I don't think that their products are bad. They are just so much over-priced that people go elsewhere.
...what happened to all those shorters?
I must say that so far where I live pub trading has been disastrous.
I was out on a Wednesday night in a large wine bar, which used to be booming. There were a couple of small groups and a customer or two. It wasn't even 10pm when I was the only punter left.
Yesterday I had a quick lunch at Wetherspoons. Busier but not quite what it used to be.
I'm not sure if the remaining restrictions are putting people off? Personally I quite like the table service.
Expectations for post-COVID hospitality industry performance have been high.
Two weeks ago pubs were allowed to open indoors. Let's talk about my personal experience.
I was in Jesmond in Newcastle on the first day of reopening. No doubt trading was good, though most pubs in the area had space inside available. Happy days were back. The following night wasn't quite as busy but still not bad for a Tuesday night.
Now, let's talk about a small town I live in near Manchester. I'm just over the Derbyshire border. Unlike in most places, lots of new (mainly) independent bars have been opening in the area.
Overall, Bank Holiday weekend looked disappointing for local watering holes. Friday was payday for many, the weather was good etc but most places weren't as busy as I would have expected. Sunday night was the most disappointing. Bearing in mind that most people had a day off on Monday I found it surprising that some places started closing at 9pm due to lack of punters!
Yes, people may still be cautious but unfortunately I'm not overly optimistic or convinced that the great boom so many have predicted is going to happen.
I don't think that people have quite as much money saved up as some businesses seem to think. It's obvious that they do as many have been quick to put their prices up. People have still been spending money online during the lockdown and many have been earning less, while the bills still had to be paid.
MAB was trading at about 320p but has now dropped. No doubt it still has some potential but there could be more upheaval ahead than many may think.
I looked at Deliveroo Hero on 30 April when its share price was €132.05. It's now €110.30. I warned about buying it at that price as it was near all time high.
On 30 April Deliveroo share price was 268p and it's 260p today.
Delivery Hero has fallen far more but Deliveroo has been equally volatile.
I would still choose Deliveroo and my trade is now finally showing a small profit.
"How is that a good business model? Charging a lot of money for something a company could easily do themselves?? OK might not be worth it for some of the restaurants, but can't see the big companies they've signed up chucking over 35% for very long. A lot of them have been caught out by the pandemic, but I think they'll begin to sort themselves out and cut out Deliveroo.
Can easily see Mcdonalds offering up their own service, their app is pretty good"
Simply because it's a pay as you go service for restaurants. They only need to pay Deliveroo as and when they use it.
Restaurants get a combination of marketing and delivery.
Hiring your own drivers is expensive and only feasible for those with a consistently high number of deliveries.
I doubt that Deliveroo is able to charge the bigger players 35%.
Delivery Hero. I've now looked into one this a bit more.
It was established in 2011 which is impressive.
However, its share price is near all time high. I'm not interested in shares at or near their all time highs.
I think that this is where most people make mistakes. They buy at a high price, expecting the trend to continue, sometimes it does.
You need to look at the value and I think that Deliveroo still delivers.
"But how is Deliveroo unique from other competitors in it's market? What distinguishes Deliveroo from other players such as UBER (Uber Eats), Delivery Hero, Just East, Grubhub and so on? I have asked this question before and I am still waiting for a solid response."
I have mentioned this before - Deliveroo is different from Just Eat in a sense that it offers a delivery service for restaurant owners as they don't have to employ their own delivery drivers. Just Eat is just a convenient way to order and a marketing platform and, from a restaurant owner's point of view, quite expensive.
Uber Eats is a clear competitor, however. The main difference here is that Uber is predominantly a gig economy inspired mini cab company but has later expanded into takeaway deliveries.
I've never heard of Delivery Hero. There may well be some new comers in a short term but eventually they are likely to be taken over by the strongest player just like Hungry House was bought by Just Eat.
...would it be time to take some profits?
Pre-pandemic, this was trading well above 600p. Under the circumstances, the current value of about 345p looks great, bearing in mind that I've just added the rights issue shares.
I can see a long-term potential but, equally, I can see a few constraints.
Inevitably, there will be less business travel. More people will be working from home, some maybe two days a week or so. Trend of having meetings on Microsoft Teams or similar has been increasing for a while, well before the pandemic. This is likely to increase.
One of the main problems with SSP is that they are quite good at pricing their food out of the market. Why would you pay a fiver for a sandwich when you can get one for half a price at Greggs just outside the station, and still £1+ cheaper at Pret a Manger (which is of better quality anyway)?
Getting air travel back in action will be crucial for this company as that's where most of their profits are likely to come.
Contrary to many others, I wouldn't write this off.
I can find one strong reason (yes, just one) why this could actually work, regardless of potentially higher employment costs,
Deliveroo provides an excellent service for restaurants in a sense that an order platform and delivery service is combined. Just Eat only provides an order platform, but restaurants using it need to arrange their own deliveries.
This point has been missed by many. Yes, restaurants may have to pay a higher commission in near future due to tighter employment regulations. Nevertheless, they don't have to employ their own delivery staff.
Some very well known chains use this service.
Only real competition being Uber Eats at the moment, I think I will add on to my holding.
With this share, it's almost impossible to predict.
When it comes to the hospitality industry as a whole, expectations are high. We've been told that people have lots of money saved up (as they haven't been able to spend it).
Personally, I've been tempted to take some profits on this one. I'm up about 55%. Since the rights issue, MAB has been trading consistently at around 320p mark, sometime a bit lower, but no higher than low 330's.
I do think that the high expectation of people returning to the pubs in masses has already been priced in. We'll find out what happens soon.
Many people won't be returning to offices full-time. The firm I was working for are looking to implement hybrid arrangements.
Having said that, idea of home-working is nothing new. I first heard someone mentioning it in 1995!
In my former office, we had 80 desks for 100 people. This was assuming that someone would always be on leave, off sick, away on business or, indeed, working from home. This arrangement was made in 2016.
COVID-19 has no doubt made this change faster.