Business confidence recovering, but challenges remain
Seven in 10 (70%) restaurant, pub and bar leaders feel optimistic about their businesses’ prospects for the next 12 months, the third-quarter Business Confidence Survey from CGA and Fourth reveals, but mounting costs and debts mean many firms remain vulnerable.
The confidence level represents a drop of 13 percentage points from the second-quarter survey - when optimism was inflated by the reopening of hospitality venues for the first time in 2021- but is the second-highest figure since the May 2018 edition of the poll. Nearly three in five (58%) leaders meanwhile feel optimistic about prospects for the general market over the next 12 months.
The survey has several more positive indicators, with just over two thirds (69%) of businesses currently trading at a profit—more than four times the 16% who were doing so three months ago - and two in five (39%) leaders saying they are performing ahead of expectations.
However, the survey also highlights concerns about hospitality’s outlook and the need for continued government support. More than four in five business leaders would like to see a VAT reduction extended beyond March 2022 (84%), business rates reform (81%) and business rates relief in 2022/23 (81%), and over two thirds (71%) support measures to address labour shortages in hospitality and the supply chain.
Karl Chessell, CGA’s director - hospitality operators and food, EMEA, said: “It’s encouraging to see such strong levels of confidence in hospitality leadership, especially given the turmoil of the last 18 months and the many cost and logistical pressures facing businesses at the moment. Many operators enter the autumn on the back of strong August sales, and momentum is building in consumer confidence and spending. But the damage that COVID-19 has wreaked on the sector will be felt for years to come, and with debt repayments and tax rises ahead, profits are going to be needed for months to come if businesses’ finances are to be secured. Firms remain in need of support on their tax burdens, labour shortages and much more, but with the right backing hospitality is well placed to power the UK’s economy as it builds back from the pandemic.”
The latest Business Confidence Survey from CGA and Fourth also highlights the integral role of technology in hospitality’s restart this year.
Well over nine in 10 leaders say tech has been fundamental (44%) or helpful (50%) to their return, and nearly half (47%) have improved their view of it. New digital solutions are here to stay, leaders think, with two in three (65%) planning to use them more than they did before the pandemic, compared to just 1% who will use new tech less.