Soaring costs dents hospitality business confidence in Britain
3 in 5 business leaders don’t feel confident about the hospitality market.
Severe cost pressures have beaten down confidence amongst the leaders of Britain’s top hospitality businesses, the latest edition of the Business Confidence Survey reveals.
The exclusive poll by CGA by NIQ shows 41% of leaders currently feel confident about the hospitality market over the next 12 months—down by eight percentage points from October’s figure of 49%. The proportion of leaders who feel optimistic about prospects for their own business in the next year has also fallen, from 62% in October to 57% now.
According to CGA by NIQ this brings to an abrupt end four successive quarters of growth in confidence and emphasises the fragility of the hospitality sector in the wake of COVID-19 and the inflation crisis. The Business Confidence Survey found that 9% of leaders believe their business is at risk of failure in 2024—four percentage points more than in October. One in 10 (10%) says their company has no cash reserves to draw on.
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A large majority of leaders say their wage costs increased (36%) or significantly increased (62%) in 2023, and the same total say food, drink and other bought-in costs rose (48%) or significantly rose (50%). Many leaders also reported increases in energy (81%), insurance (80%) and rent (47%).
The survey shows that energy and pay costs jumped by averages of 34% and 10% respectively in 2023. Respondents report average vacancy rates of 10%, and a combination of shortages and a planned increase in the National Living Wage will add more pressure to pay this year.
With the Chancellor’s Budget approaching on 6 March, business leaders and industry bodies are now calling for support from the government on a range of pressures. Nearly all leaders surveyed by CGA by NIQ say they are concerned to some extent by National Living Wage increases (99%), business rates (95%), food and drink cost inflation (98%), interest rates (84%) and VAT (84%), and their top three priorities for support are a cut in VAT for hospitality, full reform of business rates and a permanent lowering of the business rates multiplier.
Karl Chessel, director at CGA by NIQ said that without relief on tax, rates and the impact of inflation on key inputs, more businesses will be sent to the wall
“Hospitality can kickstart the UK’s recovery from recession, but only with the right support,” Chessel said.
The Business Confidence Survey from CGA by NIQ drew responses from leaders at CEO, MD, chair, board and other senior management levels, with combined oversight of more than 23,000 hospitality sites. The research was conducted in January and February 2024.
