Soaring costs and economic uncertainty have severely dented confidence in Britain’s hospitality sector, new research from CGA by NielsenIQ and Fourth reveals.
The October Business Confidence Survey shows that just 8% of leaders of multi-site businesses feel confident about the next 12 months for the eating and drinking out market. It is a sharp drop from the figure of 23% in the last survey in June—which in turn was a steep fall from 65% in March. The proportion of leaders feeling confident about prospects for their ownbusiness over the next 12 months is higher at 29%—reflecting the greater resilience of multi-site operators than independents, who have borne the brunt of closures in recent months. However, this number has also dipped, from 53% in the last Business Confidence Survey. CGA and Fourth’s research highlights the escalating costs facing businesses at the moment, with 86% of leaders reporting significant inflation in the prices of both energy and food. Challenges have been deepened by a chronic shortage of staff in hospitality, and 11% of roles are currently vacant. While four in five (80%) leaders say their business is still operating at a profit, more than half (53%) report margins lower than they were before the COVID-19 pandemic. One in eight (13%) expects their business to be either running at a loss or unviable by the end of 2022. Karl Chessell, CGA’s director – hospitality operators and food, EMEA, said: “Hospitality businesses have shown remarkable resilience since the start of the pandemic, but these figures show they are facing their greatest challenges yet. With no sign of relief on inflationary pressures for firms and consumers alike, sales and margins will be under severe strain and thousands of companies are now vulnerable. Political upheaval and market shocks have only made things worse, and urgent and targeted government support is needed to sustain the sector through this very difficult period.” Sebastien Sepierre, managing director – EMEA, Fourth, said: “There can be no denying that the hospitality landscape is in a delicate state at present, as reflected by the data outlined in this survey. Sector businesses are currently facing myriad challenges, including 40-year high inflation, spiralling energy costs, instability in the markets and an understandably cautious consumer base. Wider support is needed now, as without it, sector confidence will remain low, and much of the industry will simply be unable to weather the storm in the months ahead.”