The most recent Business Confidence Survey conducted by CGA, in collaboration with NIQ and Fourth, reveals a notable increase in optimism among leaders of prominent hospitality groups in the UK since the beginning of 2023.
The quarterly survey demonstrates that over half (54%) of leaders in the hospitality industry hold an optimistic outlook for their business prospects in the upcoming year. This reflects a significant increase of 7% compared to the January survey and more than double the number (22%) of leaders who express pessimism.
Furthermore, the proportion of leaders feeling confident about the overall eating and drinking out market has risen even more substantially, climbing by 10% to reach 40% quarter-on-quarter.
Sebastien Sepierre, managing director - EMEA Fourth, commented:
"It's encouraging to see business confidence rise across the sector in recent months, despite soaring product costs, labour shortages, and sky-high energy bills continuing to ravage the sector."
While group leaders in the hospitality industry maintain a higher level of optimism, the independent market exhibits comparatively lower levels of confidence. In the independent sector, general confidence stands at 23%, and confidence in their own businesses is at 33%. These figures are influenced by lower profits and a higher rate of closures, as observed in the latest Hospitality Market Monitor report.
Despite some improvements, all figures reported in the Business Confidence Survey still fall short of pre-Covid-19 levels, indicating the enduring impact of the pandemic on the hospitality industry. The survey highlights the ongoing challenges posed by inflation. In the first quarter of 2023, a quarter (25%) of leaders reported operating at a loss, while 32% indicated that their profitability remained below last year's levels.
Additionally, there are indications that certain businesses, weakened by the effects of COVID-19, remain at risk. 28% of leaders revealed having less than three months' worth of cash reserves, and one in seven expressed concerns about their business's potential failure within the next 12 months - a figure that remains unchanged from the January survey.
Karl Chessel, CGA by NIQ director - hospitality operators and food EMEA, said:
"These figures highlight the impressive resilience of pubs, bars, and restaurants despite the enormous challenges of Covid-19 and the cost-of-living crisis.
All our research shows consumers remain eager to eat and drink out when they can, and business leaders are rightly confident about the long-term outlook for hospitality.
Nevertheless, the relentless rise in bills for businesses and consumers alike leaves many firms and jobs extremely vulnerable.
Until inflation finally eases conditions will remain very difficult, and hospitality deserves targeted government support to mitigate costs."