Confidence returning to hospitality industry
Optimism among the UK’s hospitality leaders has risen for the third quarter in a row despite economic uncertainty, a new survey has revealed.
Despite on-going staffing challenges and rising overheads faced by the hospitality industry, 62% of leaders say they feel optimistic for their businesses over the next 12 months, according to the new Business Confidence Survey from CGA by NIQ and Fourth.
Furthermore, the proportion of leaders feeling confident about the hospitality market in general has climbed to 45%, demonstrating a ‘welcome vote of confidence’ in the sector despite pressure on consumers’ disposable income.
Karl Chessell, CGA by NIQ’s director – hospitality operators and food, Europe, Middle East and Africa (EMEA), said: “Leaders’ optimism levels are impressively high at such a difficult time for UK businesses and consumers.
“It’s encouraging to see businesses of all sizes looking to the future with such confidence, and with strong underlying demand for pubs, bars and restaurants, the outlook is good.
“However, ongoing high inflation and staffing issues mean trading conditions will remain challenging until at least the end of the year. There is no room for complacency, and operators will have to work very hard to mitigate costs and protect sales over the rest of 2023.”
With 43% of consumers now visiting the on-trade weekly, the highest figure since September 2022, significant gains in confidence have been seen among independent hospitality venues this quarter.
Average spend per visit has increased, with 54% of those surveyed saying this is due to the price of drinks now being more expensive.
However, 22% said they are spending more in the on-trade because they are treating themselves more, while 11% said they are having more drinks during visits.
When asked what consumers would prioritise for spending over the next 12 months if they faced a reduction to their disposable income, 44% said visits to the on-trade would take priority.
Despite this, all leaders surveyed said they are concerned to some extent about inflation in food and drink.
More than nine in 10 (96%) said they are concerned about energy prices and contracts, while 91% said they are worried about rising interest rates.
The survey also showed that inflationary pressures are denting businesses’ profits, with two-thirds (67%) of leaders saying their year-on-year sales growth is less than or equal to their cost increases, while one in nine (11%) leaders say their business remains at risk of failing.
Meanwhile, 91% of leaders have voiced concerns about staff shortages and 92% are worried about increases in National Living Wage levels.
One in nine (11%) roles are currently vacant and open for applications across the hospitality industry.
The Business Confidence Survey from CGA and Fourth drew responses from leaders at CEO, managing director, chair, board and other senior management levels, across more than 21,000 hospitality sites.
Earlier this year, data from beverage e-commerce platform Drizly revealed that 26% of US consumers are spending more money on beverages to drink at home rather than going out to bars, in a bid to avoid rising inflation costs.