Oiling the wheels

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0:30School ready at Whole Foods Market. If you are currently overpaying on software to run your business, remember this number, 10 ,000. That's the number of new businesses that join Odoo per month. Join Odoo today at odoo.com. That's O-D-O-O dot com. Wake Up To Money from BBC Five Live. Hello, morning. Welcome to Wake Up To Money. Donald Trump has suggested new talks with Iran could begin from today and that's pushing the price of oil down again. We'll have more on that as well as how it's feeding through to other prices. And from the price of oil and gas to the price of a pint. What the government has in place in terms of tax policy regulation is probably the toughest it's ever been for hospitality in its entire history.

1:17That's the boss of the company behind Jamie's Italian and Prezzo, among others. We'll be hearing more from him about how he's getting the restaurant chain back on its feet despite that challenging backdrop. And also today.

1:31Netflix from today starts a new feed on its app featuring videos as short as three minutes. We'll be speaking to one of the companies looking to make the most of it. Wake Up To Money with Will Bain. Morning, welcome to Wake Up To Money on Monday, the 3rd of August. Just gone five o 'clock in the morning. We're with you this morning. Great to have your company as we kick off another business week here on the programme. Yes, we will be hearing from BuzzFeed Studios a little bit later on. One of those hoping to make these shorter format videos that Netflix is rolling out to kind of compete, I guess, against the likes of TikTok and YouTube very particularly.

2:04And we will hear more from James Brown, the man behind Bravo Hospitality. They're the group that's been, first of all, turning around Prezzo and then more recently opened a Jamie's Italian in London just before Christmas, you might remember. And spoiler alert, he'll tell us a little bit later on, they're planning on opening some more. So we'll hear about why and what they're doing to try and inject a bit of love and a bit of life back into some of those hospitality brands too. So we'd love to know your thoughts on any of the stories we hear as we move through this morning. What you're seeing, for example, in terms of prices, perhaps, at your petrol pumps too with the oil story we're going to chat about.

2:3685058 is the text number to get in touch with us. 08085 909693 is the WhatsApp if you'd prefer to get in touch with us that way. Panel of guests, as always, for the next hour with me as well, Mike Tompkins, chairman of the online sportswear and fashion discounter M &M HQ in Hereford. Mike back with us on the programme. Morning. Morning, how are you? Yeah, good, thanks. Yourself? Business good? Business is okay. It's been tough though, it's been a really tough year this year. Why so? Lots of things. You know, the biggest issue I think is the cost base, still reeling a bit from the national insurance increase, minimum wages have gone up and of course the topic of the day extra fuel costs yeah we will be coming to that in just a moment so we'll hold mike's fire on that and get him to explain a bit more than that in just a second but i'll introduce the other half our panel first because victoria scholar is going to be alongside mike for the next hour victoria the head of investment at interactive investor morning great to have you back as well morning thanks so much for having me surviving a very kind of busy earnings season these last couple of weeks there was sort of a a heck of a lot of news came down Friday after we left everybody on the programme, for example.

3:53Yeah, absolutely. I mean, so much for the sort of sell in May and go away. It feels like this is a busier than ever August. So yeah, plenty to dig into over the coming days and weeks. Yeah, absolutely. And if we get a chance, we'll get you up to speed on some of those announcements, which included that Sainsbury's was selling Argos that came out seven o 'clock on Friday and that BP was to sell off its North Sea oil and gas fields. But should we start talking oil? Because the price continued to fall quite sharply, which is good news or better news for Mike and others, down about 5 % right now when I look across at the other screen,$83 a barrel-ish, though you might remember it was much closer to$70 before the war started.

4:34That move, though, that climb down has been all on the back of President Donald Trump and his true social account once again. First of all, the United States decided not to ramp up those strikes on Iran through the weekend. And the president took to social media not long after that decision, saying it was subject to being able to rapidly make a deal, a deal, of course, in block capitals, if you're even vaguely familiar with the president's social media postings these days, which would, in his words, again, include the immediate, complete and total opening of the Hormuz Strait and an end to Iran's nuclear threat.

5:08He said this was at the request of the Iranian regime, though a media organisation close to Iran said that was nothing but a new lie. What do you think, Victoria? Reasons to be perhaps sort of seeing light at the end of the tunnel of this, or do you think we've been here before? Well, it's very, very difficult to predict, as we know, because this has been going on for nearly five months now. And, you know, the president wanted it to be over in just a few weeks. And there seems to be unprecedented volatility in the market, down 5 % today. Yes, but Brent crude was up nearly 25 % last month, the best month since March at the start of the Iran war when shipping was initially blocked through this trait of Hormuz.

5:56So it feels as though there will continue to be an element of geopolitical risk premium baked into the price until we get more clarity. But yeah, we will have to continue to monitor Trump's tweets or true social posts, should I say, which of course tend to be highly correlated these days with the oil price. Mike, what impact has it been having then? You were teeing us up with it just a moment ago. Well, all the online retailers or anyone sort of sending out deliveries to home and, of course, trade deliveries as well, you're immediately hit with a fuel surcharge from your carrier, whoever they are.

6:35And that's fair enough. I mean, we can't expect them to absorb the fuel increases. But, of course, it's been there since this thing started. and we were hoping things would settle down, but as we keep hearing, it's up and down, up and down like a yo-yo. So we just presume bad news for the immediate future, sadly. Are you able to break it down on something, on one of your products? How much extra does it cost? Does it put into, I don't know, one of your products? I can break it down in a lump. It's probably easier. it's costing us about uh depending on the day any anywhere between six and eight thousand pounds extra a day and cost so you multiply that by 365 and uh there's a fair amount of cost coming out of the business yeah that we just can't get back and we are not like um it's not like a petrol station i mean we've got to fill our cars with with gas etc etc but we we're just nervous if we raise the delivery price demand may slip but we may have to if this carries on you know certainly if it carries on the next six months we're going to have to increase delivery charges so you've held firm on that so far then we've held firm because they can go elsewhere yeah yeah but so what's the kind of time frame then in terms of having to think again at that as a policy I think really every month we're looking at it, and we may have to do something next month if it gets worse, but if it gets better, we'll hold.

8:19But, of course, you never see it. As soon as the source price goes up, it seems to go up at the pumps, and as soon as it comes down, it doesn't go down at the pumps very quickly. That's the cynicism, I guess. Victoria, if you sort of replicate lots of mics around the country when we're talking about how you sort of spur growth in the UK economy, if people are taking on so much extra cost all of the time that they really can't make any other decisions, you multiply that lots of times, Mike's example, shows why the sort of real tricky position we're going to have in the second half of the year. You're right.

8:55And this was the year when we hoped that inflation would come down to 2%. That was what we were thinking at the start of the year. And obviously the Iran war has completely flipped the script and it means that cost pressures are very much front and centre for consumers as well as businesses. And it also means that interest rates have had to remain higher for longer, which again has that kind of constraining impact on the economy by making borrowing more expensive. So it is a difficult time. We've kind of been unexpectedly hit with geopolitical factors from abroad that are having a real domestic impact at a time when we were hoping that those cost pressures would be reverting back to normal.

9:41And as you were saying before, is it not just that it's high, right, that it is that volatility, it is that it's yo-yoing, that's making it really difficult for companies, consumers, to know what they're doing with their money and ultimately actually decision makers, what to do with interest rates and things like that because it's yo-yoing backwards and forwards so much. Yeah, I think that does definitely have an impact because we know that one thing that markets in particular hate is uncertainty, but also consumers and businesses. It makes it very, very difficult to plan. It's hard to think about taking out a mortgage if you don't know where interest rates are moving to ahead.

10:16If you think they might be coming down, you're going to hold off and wait for a better deal. If you think that they might go up, it might also change your behavior. So it's that uncertain element that can create a sense of sort of decision paralysis in the economy and kind of have a negative impact. And from that end consumer's perspective, Mike, have you seen what is it doing to sort of people spending confidence? I think there's been a problem for many months. And we can see people are really searching out the bargains because, you know, when we launch a product, we launch a price that's normally about 40 % less than normal retail and usually that works but but we are having to discount further and further down just to clear end of lines because I think people are being really selective we haven't noticed the baskets drop too much which is you know normally they order three items but it's definitely we can we can just feel the pressure out there yeah well someone who's dealing with similar headaches to mike i think is charlotte gregory partner at jr gregory and sons haulage company based in wrighton 11 towns in shropshire morning good morning i hear you've been busy already what you've been doing sorting out a lorry before you spoke to us that's it yeah just been down the yard trying to get everything ready for the day yeah how is it at the moment it's tough tough for everyone i think um yeah increased pressure we do a lot of agricultural work so you know there's been a harvest going on in different parts and obviously this recent fuel spike's not helped us yeah when you say not helped you can you put a rough we were just getting Mike to do a kind of rough cost on their kind of deliveries from for their clothing products have you got a rough guesstimate a month of what it's costing you yeah so at the at the moment um just based on the recent hikes in the last two weeks it's costing us an extra£600 a week.

12:16And that's across two lorries. And as you were saying, agriculture, a big part of, you know, your line of work. So presumably at some point, what, do you have to pass that cost on to, you know, a sector that's also under pressure as well as we've heard on the programme the last few weeks? Well, yeah, there's only obviously so much that different people can absorb, isn't there? When we had the fuel hike, you know, towards the beginning of the year, we we put rates up to to counteract that but obviously it's a very strained industry anyway so like you said you can you can carry on putting rates up but it comes to a point where you know there's got to be an end to it because no one's going to end up making anything to be honest now the government the previous rounds of these spikes charlotte had said that they were going to look at what and mike was just touching on this as well we're going to look at what they call rocket and feather pricing so this is where as mike says the price of it goes up very quickly at petrol pumps and then falls um much more slowly falls like a feather sort of flutters back down again when it's on the way back down again is that something that you've been concerned about and would like them to look at again yes definitely i mean um like i said before the first hike we we're looking at fuel car prices of 107 per litre.

13:36I think the lowest we've had it since then has been about 123. Well, that obviously is a massive difference alone, and what we're seeing now compared to the initial 107 is obviously a massive jump again. But, yeah, it's a massive problem because, like we all say, it always goes up so quickly, and you always think, is it ever actually this time going to get down to what we were seeing through the issues? Yeah. Mike, just on that. um yeah i'm i remain an old cynic you know i've just seen it for many many years and um it it would be nice if they were slightly more transparent that's all i'm saying there does seem to be this time or there certainly are tools right to to monitor it sounds like um you know they were asking the competition and markets authority to look at it the first time around be interesting to see if that pressure is kind of supplied uh applied as a result charlotte what's the kind of outlook for for you guys then at the business in the i don't know the last few months of the year um well if we at the moment we always say in haulage you know 50 percent normally of our gross earnings are fuel um when you start to see it creep above that 50 percent um there's trouble and i mean i i could reel off five or six businesses even that i know of haulage businesses in the last two or three months that have gone bump.

14:59And when you speak to any one of these people and their long-established, hard-working haulage families, it's simply fuel. And I think if there is nothing done, if we see higher prices, if we don't get any help, the haulages are relied upon sector. And if we don't get any help, I think there's not for us necessarily, we're holding our own currently, but I think there's going to be a loss of redundancies and maybe even more losses of businesses. And, I mean, haulage, like anything, it's a way of life. These people have devoted their lives to this cause. And a lot of them, when you say, oh, why do you do it still?

15:34Why do you do it? Because it's in my blood. It's the only thing I know. And I think that's the general thing, really. People are carrying on because what else is there to do at the moment, basically? And what should that help look like? um a subsidy uh levying you know just a bit of help from some direction um you know we're haulage the the way you tax on your fuel already and like you said we're a relied upon industry and when anything falls to hardship haulage never gets help um so yeah just some type of reduction some so we're seeing you know when we're getting our card prices through we're seeing you know less going on top of that basically thanks so much for speaking to us this morning charlotte really appreciate your time charlotte gregory their partner at jr gregory and sons haulage firm in wrighton 11 towns in shropshire just a little bit of breathing room victoria there feels like there's a lot of sectors asking for that at the moment yes for sure i mean um And we've seen a lot of volatility, not only in the oil markets, but also in semiconductors has been a hugely volatile part of the market lately.

16:47So, yeah, it doesn't feel like it's going to be a quiet August, as you say. No, it doesn't, does it? We will be talking about another one of those sectors where they're talking about breathing room a little bit later on in the programme, because we're going to be hearing from hospitality, one of the ones that the new government have pointed to, to try and give them a little bit of breathing space. 85058, what are you seeing out there, particularly in terms of the pressure of those fuel prices that Mike and Charlotte have been talking about in their businesses? Now, a lot of you run your own companies in some of those types of sectors as well.

17:14So what are you seeing? 0808599693 is the WhatsApp if you'd prefer to get in touch with us that way. Wake up to money from BBC Radio 5 Live. Let's just wrap up with one more line then on oil, I guess, because Victoria, as I mentioned, Friday, I know they've been sort of trailing this for a while, BP, but certainly seemed to surprise the actual day when it came at 7 o 'clock on Friday, this announcement that they're going to sell off the North Sea business. What did you take from it? What did the market make of it in terms of their share price reaction or any share price reaction? Yes, I'd say this is really a financial decision from BP.

17:48It's part of the new CEO Meg O 'Neill's plans to try and simplify the business and essentially improve profitability. She's looking to make her mark on the business at the start of her tenure and it looks like BP is trying to focus on higher value opportunities and I don't think it thinks that the North Sea is one of them. Half of the fields that it operates in the North Sea have already begun abandonment. We saw a sort of mildly positive share price reaction, the stock up about 1.7 % just over that. Obviously, BP shares are also correlated with the oil price, But it does feel as though that was on the whole positively received by markets.

18:33It doesn't seem, as you say, just sort of running through some of the challenges there, that tantalising a prospect in terms of a potential buyer. I mean, we know this company, Ithaca, had been in and around the market for it earlier on in the year, haven't we? Two billion pounds of the price there. Are they the name that's on your lips in terms of people who would be looking to come back in again? and presumably they're going to want to talk tax almost straight away, aren't they, whoever and whenever they do come in to try and buy it? Yeah, I think so. You're right. It's probably not going to be the easiest deal to broker.

19:09There has been, yeah, talks about Ithaca. And so, yeah, I think that there's also been discussion about this light source solar business as well. but yeah I think that this is going to be something that will favour BP and perhaps they might not get necessarily the price that they'll be hoping for. Yeah it strikes me that it's going to be extremely political if and when it does come about given all the debates that we've had on the programme about drilling in the North Sea here over the past few months. Mike the other one that came out Friday that was a well I don't know you tell me if it was a surprise being a man who understands and knows retail much better than me.

19:45Sainsbury's to sell off Argus for 120 million quid um it wasn't a surprise i think argus has you know clearly struggled um and there's been lots of sort of stuff flying around about what a stupid deal but you know i think sainsbury's um bought um a bunch of uh retailers from the home retail group for 1.4 billion i think it was if memory is correct. Yeah, that's the number I've got written here, yeah. Yeah, but that included Homebase and Argos cards and now Argos, and they've still got Habitat thrown in, which they're keeping hold of. So it wasn't a disastrous deal. I think the world's just moved on a bit in terms of, but whoever has bought it, you know, they may have a deal there because Argos is a familiar name in retail.

20:43And, you know, at the time, they were unbelievably innovative. So things can, you know, new management, new ideas, they may make a great go of it. And I wonder what your take on this was as well, Mike, because on Friday I was chatting to a couple of kind of sort of retail analysts, former people kind of in the industry, and one of them, familiar voice on the programme, Catherine Shuttleworth, who comes on, retail analyst, we're sort of suggesting that maybe they'll lean into exactly that a bit more now that they're sort of decoupled from Sainsbury's, if you like, lean into almost being distribution hub.

21:15You know, they've got this website that seems to link up with a very quick supply chain. Anybody who's ordered anything, you know, online for one that's in your local supermarket to go down will know that it's got that pretty quick delivery for electronics and things like that. Could that be where you think they might go next, away from kind of, yeah, more sort of distribution and stuff, and perhaps distributing for other people too? No, very much so. I mean, they're almost going to be a retail portal, like an online marketplace, potentially. So I think it's good. I mean, I use Argos and you buy stuff and you pick it up the next day, you know, at your local Sainsbury's.

21:53So that's been great. But, you know, the original model obviously wouldn't work now of sort of big stores. You're pining to go back to the catalogue again. Just Mike sat there before Christmas ringing what he wants on his Christmas list. Yeah, I used to go with a pencil and a pen and just run out and give them the little slip. Yeah, those were the days, eh? We were scratching our heads, Victoria, for the competitor one. It was lodged in the back of my brain. Index, I think we came down on, wasn't it? Was the other kind of catalogue one like that back then? Or are you too young for that? Do you know what?

22:28I have no idea, but I do remember as a child going to Argos and really loving flicking through their catalogs. That was the best bit, wasn't it? It was better than getting the stuff almost. For sure. What do you make of the deal and the moves and where they might go next? Yeah, so Mike was saying that you can go online and click and collect something the next day, but I think it's actually better than that. By the afternoon sometimes. That same day. In London or some of the bigger cities. Yeah, and we've seen that actually, we saw from Sainsbury's most recent numbers that in the first quarter it really benefited from that because there were real strong sales of fans in the heat wave.

23:13So when things are sold out on Amazon or it feels like 24 hours is too long to wait, Argos does genuinely have a competitive advantage. But in terms of the deal, Sainsbury's has been struggling in terms of its discretionary general merchandise for a while. It's obviously a very highly competitive... That's stuff that's not food, basically. Exactly. It's been struggling. That part of the market is very, very competitive at a time that was already said in this programme, but consumers are making cutbacks. but it doesn't take an expert to work out that buying a company for over a billion pounds and selling it for around 120 million pounds 10 years later isn't a great outcome for Sainsbury's.

23:57No interesting Simon Roberts the Sainsbury's chief executive in the notes that came with the announcement of that planned deal saying it was to really sort of focus down triple down again on food just a final note on that as well everybody I spoke to seems to be very interested in who the buyers were, Mike, that these were sort of former guys who'd had lots of kind of retail experience. Richard Pennington in particular had been the chief executive at Co-op. Trevor Strain, who he's buying it with, had been at Tesco for a long time. They'd both been at Morrison's together. Kind of quite interesting just in that sense, isn't it?

24:30Sort of people starting out together, new company, new player in retail, using their experience to get involved. Yeah, they can see value at the price. So, you know, they will do something with it. They will turn it around. And I hope it survives and I hope it thrives. Yeah, really interesting. And one more big deal, it seems like, or one in the making, Victoria. It's the top of the Financial Times' website this morning, among others, Bloomberg as well. AstraZeneca holds talks with Bristol-Myers Squibb, over$400 billion type. Like this would make it really in the real handful of the absolute biggest of big boys in the pharmaceutical sector, should this go ahead?

25:15Yeah, absolutely. They're in talks to create this near$400 billion pharma giant, which would be the biggest pharma deal in history, creating this mammoth player, as you say, in the global medical drugs market. And for AstraZeneca, it's pretty clear what the kind of rationale is behind it. the company already has around or close to half of its revenues in the US. So that would help to kind of solidify its presence in the US. Also, there's a lot of synergies in terms of their global oncology franchises. They're both big players in that space. And then there'd likely be synergies around like research and development and other cost deficiencies as well.

26:00But with such a big deal like this. Obviously, the companies themselves firstly haven't confirmed it yet. But if they do, if they do agree to go ahead, there will be a lot of antitrust scrutiny, there'll be a lot of regulatory hurdles, because it could be anti competitive to have such a large player in the global market. So it will be no by no means a done deal. Yeah, and absolutely. And President Trump and that administration in the United States, we're particularly interested in what's been going on in the pharmaceuticals industry since they came back to power again. So I'm sure that they and their regulators that they have appointed will be looking at that pretty closely if and when a deal does come, as Victoria says, does show them as well, doesn't it?

26:41We've talked a lot about the need for scale in things, the money going into drug research, certainly not alone in that. And hence the need for such an enormous tie up. Fascinating deal. Sure, we'll chat again about it. Plenty more on the programme if and when there are developments around it. Plenty more from Mike and Victoria in the second half of the program. We're going to talk hospitality. We're also going to talk Netflix and short form video. So taking it to YouTube, it seems. Pop quiz. What's in your kid's lunchbox? At Whole Foods Market, they've already done the studying. Over 300 food ingredients are banned from their shelves.

27:19No hydronated fats in the peanut butter and no high fructose corn syrup in the cookies. And for sandwiches, there are no synthetic nitrates or nitrites in any of their deli meat so you can pack lunch boxes with peace of mind get back to school ready at whole foods market from taco night in tulum to sushi in tokyo everybody's rewarding and post worthy with mx gold's four times membership rewards points at restaurants worldwide wherever you dine points are piling up so bring your friends along for your next course because it's not all about the posts it's about the company and the memories how can gold from mx sweeten your next food moment learn more at americanexpress.com slash explore dash gold terms and points cap apply as well wake up to money with will bade morning welcome back to wake up to money on monday the 3rd of august where our panel this morning and mike thomkins the chairman of the online sportswear and fashion retailer M &M Direct HQ in Hereford and Victoria Scholar, head of investment at Interactive Investor.

28:26With us, Mike, someone's text in, wading into mine and yours nostalgia about these catalogues here, saying, Shoppard's World was the Argos rival created by Woolworths they threw in the town by 1983. Do you remember them? I am old enough to remember, but I can't remember it. I apologise. No, no. If you know more, if you were passionate about it, Do text back in again, 85058 on the text 08085909693. If you want to get in touch about your happy memories of flicking through various retailers' catalogs before Christmas, or indeed if you want to chat about what we're going to talk about next, which is what's going on in hospitality.

29:06Because the chief executive of the company behind Prezzo and the relaunch of Jamie's Italian and has told us that the previous chancellor, Rachel Reeves, his national insurance increases made the problem of youth unemployment worse, adding that it was anti-growth and an own goal for the country. James Brown has been chatting to us about that, but also about what they're doing to try and bring back or put a bit of TLC into a couple of brands that obviously had lost their way a bit in Prezzo and in Jamie's in particular. In fact, you talked about potentially opening some more of those Jamie's in Thailand.

29:36So here's a little bit of our conversation. If you're a local operator, or even you've got three or four pubs or restaurants in a local town, I would like to be really clear and say that it's really, really tough for them. What the government has in place in terms of tax policy, regulation is probably the toughest it's ever been for hospitality in its entire history. It's really hard to explain to a guest why a pint that probably costs you£1.20 to buy in is getting sold for£6,£57 sometimes. And if you're in London, even more. And the reality is, it's just the duty, the cost of the staff. Many consumers don't really even understand that there is duty in beer and or that if you employ a staff member, you've got to pay 15 % of the hourly rate to the government every hour you employ them.

30:16These are real challenges that businesses face. it is really tough out there and i think that tom carriage and the various uk hospitality and british pub association and many other organizations backing the kind of reduction in vat is something that i would back as well and whilst we're on the front foot and we have investors that are willing to invest and take a long-term view on our business we're fortunate to have that if you have to pay your mortgage you're a sole trader or you have to make sure that your books balance at the end of the quarter or the end of the year however it works for you it is really really tough right now and it's hard to take a long-term view when it is so tough if you do just put the price up and pass it on to the guest that is actually really hard because the guest just doesn't come back as much or it's harder to give value so we would implore anyone listening that has any power or influence to listen to the sector and to hopefully stem some of these restaurant closures because the reality is is if you're an operator like me or an independent you don't want your neighboring restaurants to shut down because often having a choice in a town with pubs restaurants bars makes that a destination and it means somewhere to go and often if those pubs shut down it makes the town less attractive as a visit anyway so it kind of impacts everyone i'm optimistic with the new administration and new prime minister and andy burnham that i think he gets hospitality a little bit more and i think hopefully whilst it's not everything the reduction in business rates is a starting point and i'd hope to more come and support supporting people and that's someone from to be clear to your listeners that restaurants didn't get a cut but that's for And it's important for restaurants to have pubs because the hospitality sector and the nightlife sector is interconnected.