Optimism in the eating-out sector hits a six-year high

By Stefan Chomka

- Last updated on GMT

Related tags: Finance

Back in growth: restaurants rallied after a woeful March
Back in growth: restaurants rallied after a woeful March
Increased spending in the eating-out sector will provide some welcome relief for restaurateurs this year and could help pave the way for an economic recovery, according to figures released by the CBI.

Research by the organisation shows that hotels, bars and restaurants have enjoyed their biggest rise in trade since August 2007. As a result, overall profitability of consumer businesses rose for the first time since November 2007, in spite of employee costs continuing to increase.

“There appears to be a sense of growing confidence in the service sector. We’ve seen some turnaround in activity this quarter, and a more positive outlook for the next,” says Stephen Gifford, CBI director of economics. “What’s promising is that consumer services have seen growth in activity, and expect this to continue, pointing to a greater willingness from people to go out and spend.”

New research from NatWest and RBS also points to growing optimism in the restaurant sector, with many leisure businesses upbeat about their prospects for the year ahead. The research, which surveyed 550 responses from across the leisure industry, shows that 48% of owners believe their business will grow in the next year, with 73% saying they are either optimistic or very optimistic looking forward.

Meanwhile, Britain’s pub and restaurant groups returned to sales growth in April after a disastrous, weather-hit March, the latest figures from the Coffer Peach Business Tracker show. Following six months of like-for-like sales decline in London, the annual rate turned positive, up by 0.3% on a year-on-year basis, it reports.

Funding options

However, concerns remain among businesses over a shortage of internal finance and an inability to access external funding, according to the CBI. “It’s vital that growing firms look at the full range of funding options on the market,” says Gifford. 

The CBI has launched an alternative finance guide to help SMEs consider the funding options available to help them grow. Called Ripe for the Picking, the guide addresses funding options including asset-based lending, crowd funding, corporate venturing, the Business Growth Fund, private equity and the retail bond market.

“Banks will continue to be a vital source of finance but it’s not a one-size-fits-all solution, and we’re encouraging growing firms to open their eyes to the broad range of funding options on the market,” says Katja Hall, chief policy director at the CBI. “Growing businesses could look to corporate venturing, for example, or to issue retail bonds, like Hotel Chocolat did with its innovative chocolate bonds.”

NatWest and RBS, meanwhile, has launched a £150m fund to support investment for the leisure industry. The fund offers two six-month capital repayment holidays, allowing breathing space for investment and contingency planning.

The June issue of Restaurant magazine is out now. To subscribe, click here,​or view the digital edition here.

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