Confidence among senior executives in the eating out sector about the general market has continued to fall as cost pressures and external challenges start to bite.
The latest CGA Business Leaders’ Confidence Survey shows that operators’ confidence in their own businesses is relatively flat – with 66% saying they are optimistic about the next 12 months – the same as the figure in May and up on the 61% in November 2016 and 24% in July 2016 (although down from 83% in February of last year).
However, only 34% said they were positive about the sector’s prospects over the next year, compared to 43% in May and 47% on February.
Analysing the size of companies responding, the poll found that smaller operators were more positive both about their own prospects and that of the sector. In all, 68% of operators with fewer than 10 sites were positive about their own business and 39% the sector. For those with 10-100 sites it was 58% and 34% respectively and for 101+ it was 50% and 29%.
Brexit was a key concern for operators, with 71% saying it had adversely affected their business.
However, the survey also highlighted wider concerns about threats to the market. More than three quarters of leaders said their business has been affected by increases in food costs (81%), and nearly as many (70%) said they had passed these increased costs on to consumers via menu price rises in the last quarter. High numbers of business leaders said they had been hit by increased business rates(78%), increased staff costs (70%) and the impact of terrorism (45%).
CGA vice president Peter Martin said: “Our latest Business Leaders’ Confidence Survey is a fascinating snapshot of a sector that, in general, is determined to ride out the stiff headwinds it faces. Food, property and staff costs are rising, Brexit negotiations are causing havoc with exchange rates, imports and staffing, and consumer confidence remains patchy.
“Before the Brexit referendum confidence in the market was sky high. It plummeted straight after the vote, and although confidence in both leaders’ own businesses and to a lesser extent the general market have recovered, they are not back to early 2016 levels. The worrying aspect is the gap between market and company optimism and the effect this uncertainty might have on decision-making, especially around investment and growth.
“The good news is our findings is that two thirds of business leaders are upbeat about their own prospects, which is a welcome corrective to the doom and gloom, and a reminder of the intrinsic dynamism and ambition of large parts of Britain’s eating and drinking out industry.”
