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The Markets
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The Markets
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Proactive UK has moved.
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Retail

Pubs and restaurants falls on rail strike worry - though suburbia may benefit

Worst affected were those with outlets in stations, including WH Smith, SSP and Wagamama owner Restaurant Group

Hospitality shares slipped slightly on concerns about the effect of this week's rail strikes on the sector.

Some retailers with a focus on railway stations, such as WH Smith, were also hit.

The chief executive of UKHospitality, Kate Nicholls, told BBC radio that the disputes could cost restaurants, pubs and other businesses around £500mln in lost revenue.

With rail workers asked to accept a pay rise of 3% compared to current UK inflation near 10%, along with pension cuts and demands for longer working hours, more than 40,000 members of the Rail, Maritime and Transport Workers (RMT) union walked out on Tuesday, with further strikes planned for later in the week.

While the strikes are set to empty streets in urban area, spending in suburbia may hold up, with more commuters staying home and venturing out more locally instead, said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Such an effect was seen in lockdowns, with local convenience stores and hospitality benefitting.

"Many pubs, venues and restaurants are shutting up shop early this week because staff are unable to get into work," Streeter says.

Hospitality businesses were already finding it hard due to labour shortages and rising costs.

A fresh survey from the Office for National Statistics found the accommodation and food services industry reporting the largest number of businesses experiencing labour shortages, with 35% firms saying it was a problem in mid-June.

Hospitality bosses are also fretting about the soaring electricity gas and fuel bills with the ONS survey finding 47% of sector firms saying energy costs were a concern, up from 29% in May.

Sourcing key products is also an issue for many companies, with more than a fifth (21.7%) of firms still having to deal with supply chain disruption.

In the stock market, WH Smith PLC (LSE:SMWH) was down more than 2%, SSP PLC, which also focused on travel outlets in stations and airports, was down 1.5%, while Wagamama owner Restaurant Group PLC dropped 4%.

Pubs groups City Pub Group PLC (AIM:CPC), Mitchells & Butlers PLC (LSE:MAB) and JD Wetherspoon PLC (LSE:JDW) 3%, 2% and 1.9% respectively, while Premier Inn owner Whitbread PLC fell 1.5%.

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