62% of hospitality leaders optimistic despite economic woes

This is the third quarter of confidence increase amongst business leaders.

Optimism among Britain’s hospitality leaders has risen for the third quarter in a row, the new Business Confidence Survey from CGA by NIQ and Fourth reveals.

More than six out of 10 or 62% of business leaders said they currently feel optimistic about prospects for their business over the next 12 months—an increase of eight percentage points from the last survey in May. The proportion of leaders feeling confident about the hospitality market in general has climbed by five percentage points quarter-on-quarter, to 45%.
 
Meanwhile, more than four in five (84%) leaders say they operated at a profit in the second quarter of the year, and 37% did so at a higher margin than in the same period last year.

Confidence in smaller business have also swelled with two in five feeling optimistic about prospects for hospitality—sharply up by 15 percentage points from the last survey.

However, economic challenges are still top of mind for many business leaders in the industry. All leaders say they are concerned to some extent about inflation in food and drink, and more than nine in 10 are concerned about energy prices and contracts (96%) and interest rates (91%).
 
These inflationary pressures are denting businesses’ profits, the survey shows. Two thirds (67%) of leaders say their year-on-year sales growth is less than or equal to their cost increases, while one in nine (11%) leaders say their business remains at risk of failing—though this is three percentage points down from the last survey.

Businesses are also dogged by personnel issues, with 91% of leaders concerned about staff shortages and 92%by increases in National Living Wage levels. One in nine (11%) roles are currently vacant and open for applications—a quarter-on-quarter increase of two percentage points.
 
“Leaders’ optimism levels are impressively high at such a difficult time for UK businesses and consumers. It’s encouraging to see businesses of all sizes looking to the future with such confidence, and with strong underlying demand for pubs, bars and restaurants the outlook is good. However, ongoing high inflation and staffing issues mean trading conditions will remain challenging until at least the end of the year. There is no room for complacency, and operators will have to work very hard to mitigate costs and protect sales over the rest of 2023,” Karl Chessell, CGA by NIQ’s director - hospitality operators and food, EMEA, said.