Optimism dips among leaders of out-of-home eating and drinking
CGA survey reveals ‘perfect storm’ of challenges including rising food and property costs and Brexit.
Optimism among leaders in the eating and drinking out sectors has been substantially dented since the start of the year, CGA’s latest Business Confidence Survey reveals.
The survey finds that only 30% of leaders of restaurant, pub, bar and coffee shop groups are optimistic about general market prospects for the next 12 months—down from 47% in the first quarter of 2017. Optimism about prospects for their own businesses has followed a similar trajectory, falling from 68% in the first quarter to 52% in this latest survey.
The exclusive research, based on responses from well over 100 senior executives across the sector, including big corporates and small entrepreneurial operators, was revealed at CGA’s Peach 2020 Conference last week. It also finds that a third (32%) of leaders admit their business’ performance has been below expectations in the last six months—down by five percentage points from May’s survey.
The new figures chime with other CGA research indicating tough trading conditions.
The Coffer Peach Business Tracker reveals that like for like sales at leading managed pub and restaurant chains have risen by just 1.3% over the last 12 months, while the CGA Prestige Foodservice Price Index has demonstrated sustained rises in food costs over 2017. Property and people costs have also increased this year.
The latest Business Confidence Survey finds that optimism is unlikely to increase in the short term, with more than half (57%) of leaders concerned about consumer confidence over the next six months—though only one in eight (12.2%) is pessimistic about their own business’ prospects for the next year. CGA research presented at the 2020 Conference reveals some more positive trends, including evidence from the CGA BrandTrack survey that consumers eat out just as often as they did four years ago—and that frequency among 18 to 44 year-olds is at a four-year high.
Other issues highlighted by CGA’s Business Confidence Survey include the Brexit fall-out. 71% of leaders say the decision to leave the EU has had a negative impact on their business, with only 3% citing a positive impact. More than three quarters of leaders say increasing costs of raw materials (79%) and rates (78%) have negatively affected their business. Also more than two thirds (69%) of leaders say their business has increased menu prices over the last quarter in light of soaring costs.
CGA vice president Peter Martin said, “Our Business Confidence Survey is the clearest indication yet of the trials facing the leaders of out-of-home eating and drinking. With food, property and people costs all rising, consumer confidence softening, competition intensifying and Brexit casting a long shadow over the future, operators are enduring something of a perfect storm of challenges. But this is a creative and resilient sector, and while leaders’ optimism has been dented this year, they will be rolling up their sleeves and fighting hard for growth in 2018.”
