Good morning, and happy new year, it's Paul here!

I'm working the afternoon shift today, so should be finished here by 6pm.

Edit at 17:17 - this portfolio review is taking much longer than expected, so I'll just keep going until it's finished, est. 10pm. Apologies for any inconvenience. I'm sorry if some people don't like variable timings, but that's what achieves the best overall results - I'm not going to rush for deadlines, churning out sub-par quality.

Edit at 21:33 - today's report is now finished.

There's only 1 company to report on today. So I'll use the spare time after that, to do the previously promised commentary on my current small cap holdings. That will then complete everything I wanted to write about for 2019. I very much appreciated all the kind comments from subscribers about my end of year articles, so thank you for those.

Tasty (LON:TAST)

Share price:  3.75p (37% today)
No. shares:  141.1m
Market cap:  £5.3m

Trading update & property disposal

Background- I don't normally go below £10m mkt cap for reporting purposes here, but there's nothing else to cover today, and Tasty has been on my watch list for a while as a potentially interesting company.

It operates casual dining restaurants, under the Wildwood brand (pizza, pasta, grill), and dim T brand (oriental). The Kaye family are involved here, who have had previous success with pizza/pasta restaurants - although perhaps their ideas are a bit dated & stale now? Arguably newer operators (e.g. Franco Manca by Fulham Shore (LON:FUL) ) are doing better, and more affordably priced pizzas.  Wildwood relies on permanent discounting (amongst other discounts, they are trialling the BigDish (LON:DISH) platform in one site). Also, I think the everyday low pricing model (with no discounting) that Franco Manca uses is a lot more sensible than permanent heavy discounting.

As you can see from the share price chart below, this share is little more than a call option on the company surviving. Its previously reasonable level of profitability collapsed into breakeven/losses from 2016 onwards. The main problems?

  • Over-capacity in the hospitality sector
  • Rising wages costs (if anything this is getting worse, with a large recent increase in Living Wage announced by the Govt)
  • Unaffordable rent/rates

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