Confidence in the restaurant sector remains fragmented, study claims
Patchy confidence levels are prompting leaders to scale back expansion.
Confidence in the restaurant sector remains fragmented amidst anxiety over complex issues like Brexit and other challenges, according to a new survey from market research companies CGA and CPL Online.
The survey, which interviewed 175 individuals working in the industry at senior management level, found that around two thirds (68%) of leaders are optimistic about prospects for their business over the next 12 months—five percentage points more than at November 2018. But the number of leaders feeling optimistic about prospects for the market in general is significantly lower at 39%, no change from November data.
“Our Business Leaders’ Survey reveals an industry caught between instinctive confidence for growth and caution about the challenges they face. It is encouraging to find that more than two thirds of leaders are optimistic about prospects for 2019 but concerning that far fewer feel upbeat about the market as a whole. We are also seeing a growing divide in confidence levels between pub operators, many of whom enjoyed a good 2018, and the restaurant sector, which endured a tough year,” Phil Tate, group chief executive of CGA, said.
Only a quarter of leaders (24%) are planning to open more than five new sites this year—barely half the 45% who intended to do so at the time of CGA’s 2016 survey.
However, there is a notable contrast in confidence between the pub and restaurant sides of the sector. More than half (53%) of leaders of drink-led operators say they feel optimistic about the general market in 2019, compared to only a third (33%) of food-led business bosses.
Two in five (40%) of all leaders say their business has traded ahead of expectations in the last six months—14 percentage points higher than at last year’s survey. But with CGA’s Coffer Peach Business Tracker indicating like for like sales growth of just 0.8% for managed pub and restaurant groups in 2018, this may be more a reflection of leaders’ relatively low expectations for 2019 than of strong trading.
Of the reasons cited by those surveyed, Brexit is causing significant uncertainty, with the availability of back of house staff a key concern. The growing popularity of delivery, meanwhile, is being viewed as a double-edged sword by the leaders, with benefits of incremental sales but concerns about its negative effect on brand perception.
Other big trends at the top of leaders’ minds in 2019 included healthy eating, sustainability, technology and the importance of the all-round experience.
“With so much talk of market saturation, indications that leaders are reining in their new openings should be little surprise. On top of that, Brexit is casting a long shadow over ambitions. But difficulties for some operators will always create opportunities for others, and leaders of well-defined and customer-focused brands are going into 2019 with grounds for cautious optimism,” Tate added.
