shieldbug
03 Oct 2017
Re: store growth slows Hi BV"the reason so much coffee is consumed abroad is because of the lack of decent tea bags"Being served a cup of hot milky water with a tea bag floating in it, does not add much value to the product. Coffee has proved a great product for adding value.
B.V
03 Oct 2017
Re: store growth slows Hello lotcangowrong,I agree with you entirely. However, most people nowadays seem to buy teabags for ease of use and in restaurants and hotels one does not usually have any choice.Regards,BV
lotcangorong
03 Oct 2017
Re: store growth slows Not sure there is such a thing as a decent tea bag. Slice one open and all you find is powder. What's wrong with proper tea leaves?
B.V
02 Oct 2017
Re: store growth slows Hello shieldbug," Meanwhile UK is the 45th on list of world coffee drinkers. Plenty of room for improvement. "I agree, but it could be that the reason so much coffee is consumed abroad is because of the lack of decent tea bags anywhere outside the UK.Mind you, I've never been to India or China or Japan. You may get a decent cup of tea in those countries.Regards,BV
shieldbug
02 Oct 2017
Re: store growth slows Meanwhile UK is the 45th on list of world coffee drinkers. Plenty of room for improvement. [link] personal view is that in the UK there has been a profound shift from drinking alcohol socially to drinking coffee socially. My expectation is that this will continue.
gamesinvestor
29 Sep 2017
store growth slows [link] total number of U.S. coffee shops is expected to grow just 2.17 percent this year, making it the slowest growth rate in six years, according to a new Mintel report.One coffee category that continues to enjoy hot growth but is still small is refrigerated cold brew coffee, which has enjoyed 460 percent sales growth since 2015.Mintel also said the single-cup coffee market, dominated by K-cups, continues to slow.Games
shieldbug
11 Sep 2017
Europe It seems odd that the Annual Report does not appear to mention Brexit or the EU Referendum. It would be helpful to see that with 50,000 employees and 40% employee turnover that this has been considered by the company. Even if this is not a business risk it would be good to know they had it covered. Have I missed something?
Hardboy
25 Aug 2017
Re: Declining Growth Agree with both of you - the market is far too concerned with like for like. What is important for business owners (i.e. we shareholders) is ACTUAL profits. All businesses are constantly evolving and changing in reaction to changes in markets, opportunities and threats. Whitbread is a great example. When I first knew them they were a beer brewer, they've been through transitions including running fitness clubs; not they run hotels and cafes, and roast coffee. If we look at long term like for like trends for the business they would be awful, but actually it has been a success story. Lots of other examples - good & bad - Rank used to make films & run cinemas, now they are into gambling. M&S primarily ran clothes shops, now they seem much better at running food shops. Rolls Royce started making cars, now it's aero engines. etc. etc.
Bill1703
25 Aug 2017
Re: Declining Growth "The expectation seems to be that growth in "like for like" is the mantra these days..."Yes, Games, and I hear what you say about the 'voting machine'... I think the market has become (far?) too hung-up about LFLs, often without thinking through what matters for actual value creation across a whole business.But, you give people the vote, just look what happens! Personally, I wouldn't... it is also difficult to tell people what to vote for (whether its sales LFLs, or a 2,000 mile wall, say) and then squeal when they throw your lack of delivery back at you...BUT... us genuine long term investors don't have to worry about the voters! And you can't "weigh" LFLs... it's a delta, not a quantum! Or something like that...When it comes to weighing, I am more than happy with how I think the scales will look for WTB overall, and Costa within it.
gamesinvestor
25 Aug 2017
Re: Declining Growth HB-Bill -- I get both your points, but the voting machine (the market for now) seems to view it in the former manner rather than the latter.The expectation seems to be that growth in "like for like" is the mantra these days and the chappies doing the weighing (the weighing machine) seem to think that the value is attributable to that rate of (like for like) growth much more than the overall mass growth which you correctly describe.Everyone wants to be seen to have their share prices linked to acceleration (according to your accurate description) rather than a business travelling at constant speed -- rightly or wrongly it would seem.Games -- still it's a long game and there is no doubting the overall quality of Costa and it's place within Whitbread. ----- If it dropped toward 3000 I think I could be interested.
Hardboy
24 Aug 2017
Re: Declining Growth Hi Games, I think you've more or less got it but let's try to explain it. In 2012 total sales were up 28% on the total sales of 2011. In 2013 total sales were up 25% on total sales of 2012. 25% is less than 28% so the graph makes it look like slowing growth, but the % is a % of a different amount.Let's say sales in 2011 were £1m. In 2012 they were up 28% so total sales for 2012 were £1.28m - up £280,000In 2013 sales were up 25% of £1.28m so they were £1.6m - up £320,000So although the % rise is less the actual rise is more. This is the problem with comparing %s. I always liken it to velocity and acceleration. If a car accelerates from 30 mph to 40 mph in a minute the speed has increased by 33%.In the next minute if the car increases its speed from 40 to 50, the acceleration is constant at 10 mph per minute; but the percentage increase in speed has reduced from 33% to 25%, which sounds like a drastic reduction, but actually the acceleration is constant.
Bill1703
24 Aug 2017
Re: Declining Growth "That would suggest... the growth has been quite healthy..."Yes, I am with Hardboy here... it is amazing how many people get spooked by such a chart, without thinking through the maths of it, or the economics. If you showed them the same data, but in a line chart, of actual quantum of sales, going up and up, they would most likely say..."WOW!"It is hardly surprising in a gradually maturing business, where the economic base is increasing every year... there is no "disaster" here, small or otherwise.Too much focus is put on LFL data, it merely serves to confuse those who don't understand it. I would be more than happy for Costa to settle down to minimal, even flat LFLs... with the high margins and excellent returns on capital employed (incremental, not your backward-looking RoCE), this would still be a decent investment proposition. And on top of that, absolute growth driven by new store roll-out... whether in the U.K. or overseas. Games is right, they have to think about cannibalisation... but we know that they do! And there are still plenty of smaller towns and lesser-travelled high streets to take the brand to... and not just smaller towns either. People often take a too-parochial view on this... easy to wander down a central London street, or high street in Mainstream Kent, and worry about saturation. But they should get out and about more....But I am more interested in China, along with various other prime regions, absolutely chock full of coffee-drinking people!
gamesinvestor
24 Aug 2017
Re: Declining Growth HB -- Thinking about the absolute numbers which you state are related to the numbers you highlighted, it illustrates the danger perhaps a little more -- If your numbers are actually falling in real terms (lets say average the 4 biggest numbers giving you 34.75) the fact that the number is 29 in 2017 is a small disaster, in that if "absolute" it includes all the many new shop openings as well.What then would appear to be happening is that they are opening into a falling market (falling from a margin and profit per unit stance at least) which is going to excacerbate and compound the problem down the line -- especially if the declining like for like starts to go negative (growth) and then you have a whole mass of potentially negative growth units on your hands and a more difficult financial situation.2012 28 units2013 32 units2014 34 units2015 36 units2016 37 units2017 29 units.That's assuming that's what you meant.Games - Reaches for the Lavazza -- just kidding !!
gamesinvestor
24 Aug 2017
Re: Declining Growth HB -- You've lost me m8, I obviously haven't had enough coffe yet lol !!What do these numbers relate to?2012 28 units2013 32 units2014 34 units2015 36 units2016 37 units2017 29 units.Games
Hardboy
24 Aug 2017
Re: Declining Growth Games,Thanks for posting that. The graph is very interesting, and illustrates once more how wrong it can be to compare % growth figures when not starting from the same base point. If we look at the total growth graph - it would suggest quite dramatically reducing growth rates, but if we do the calculations and look at absolute growth the figures give a very different picture. Taking 2011 as a base of 100 units, the growth is: -2012 28 units2013 32 units2014 34 units2015 36 units2016 37 units2017 29 units.That would suggest (apart from the last year, which is a reduction, but still reasonable growth in comparison with the other years) the growth has been quite healthy, with the actual growth increasing most years.
