A survey of sector leaders has revealed 71% feel Brexit has already had a negative effect on their business – rising to 80% in London.

The CGA Fourth Business Confidence Survey shows 80% of food-led operators feel the referendum has damaged their business, as well as 60% of drink-led companies.

Just 1% of leaders surveyed have seen a positive effect of the referendum up to this point.

Most cited an increase in the cost of ingredients and the decreased availability of staff. Nine in ten (92%) say the reduced access to kitchen staff has had, or will have, an impact on their business.

Almost half of the leaders surveyed forecast people’s frequency of eating and drinking out will decrease over the next six months, and 9% expect it to increase.

Three quarters of operators have anticipated the impact of Brexit by investing in staff training and retention, while 27% have invested in local food and drink suppliers. However, 31% still consider their business to be under-prepared for Brexit, or not prepared at all.

The poll shows 36% of leaders have passed costs onto consumers in light of preparing for Brexit.

Amid the challenges, the research reveals some grounds for cautious optimism in the sector. More than a quarter of leaders (29%) say their business’ performance had been ahead of expectations, thanks in part to the twin boosts to pubs and bars of the hot weather and the football World Cup. Some bosses also see possible long-term benefits of Brexit, especially if it cuts red tape and reduces non-EU tariffs.

The survey shows 36% are optimistic about prospects for the market over the next 12 months - a drop of 11 percentage points since the last poll of leaders in May.

While two-thirds (67%) remain upbeat about their own businesses’ performance – that has dropped from 75% over the last quarter.

The survey shows that a ‘soft Brexit’ is the favoured option for 62% of bosses. No other outcome, whether ‘no deal’, ‘Chequers’ or ‘hard Brexit”, gains over 10% support. In addition, 69% said they believed there should be a second referendum.

Phil Tate, chief executive of CGA, said: “Our Business Leaders’ Survey is the clearest indicator yet of the dramatic impact of Brexit on the hospitality sector. It reveals the huge disruption that the EU Referendum has already caused to the costs and confidence of businesses, and the further impacts it is likely to have on staff recruitment and retention, especially in London. Our research suggests that the large majority of operators are now pinning their hopes on a ‘soft’ Brexit, or even a second Referendum. But while many businesses are moving to mitigate the effects of Britain’s departure from the EU, some are, by their own admission, still not ready for it.”

Tate added: “Restaurant, pub and bar operators that are sharply focused on meeting consumers’ needs, offer good value for money and are well differentiated from the competition still have plenty of headroom to grow. But the Business Confidence Survey confirms that Brexit is going to bring enormous challenges for the sector into 2019 and beyond.”

Ben Hood, chief executive of Fourth, said: “It is clear to see that sustained Brexit uncertainty has impacted confidence among industry leaders. With rising costs – including those associated with employment – a shrinking talent pool and the sector’s heavy reliance on EU workers, the government needs to navigate the complex process of leaving the EU with an approach that supports hospitality employers.”

“Beyond the negotiations, and despite the uncertainty, what we see is an industry rolling up its sleeves to negotiate the challenges ahead: it is clear that employers are stepping up their investment in technology that supports upweighted training and development as well as employee culture and engagement,” Hood added. “These are the things that matter when it comes to attracting and retaining the best talent, and ultimately, as we know, are critical in delivering the right guest experience.”