Hospitality's confidence shattered as sector continues to reel from impact of Covid

By James McAllister

- Last updated on GMT

Hospitality's confidence shattered as sector reels from impact of Covid

Related tags: Cga, Restaurant, Pub, Coronavirus tier system, Coronavirus

The pandemic has wrecked confidence across hospitality, with less than a fifth of business leaders in the sector optimistic about the market’s prospects over the next 12 months.

According to the latest Business Confidence Survey carried out by CGA and Fourth, just 18% of leaders are optimistic about the year ahead.

The figure is 42 percentage points down on the pre-pandemic level of 60% in the February edition of the Survey. 

Extended restrictions over the autumn have led to more than a quarter (27%) of multi-site business leaders predicting they will be unviable within the first six months of 2021, if current levels of support continue.

The survey shows that single-site businesses are at even greater risk of failure.

Concerns are fuelled by the damaging impact of the new tightened tier system in England, with 88% of leaders saying their pubs, bars and restaurants will be unviable in Tier 2, where 59% of licensed premises are located.

However, despite the lack of market confidence, some 35% of leaders say they are optimistic about their own business’ prospects over the next year.

There are also signs of cautious ambition, with more than two in five (44%) leaders intending to open new sites in 2021.

“As we near the end of hospitality’s toughest year in memory, the bleak picture of the sector will come as little surprise,” says CGA research and insight director Charlie Mitchell.

“Suffocating restrictions across Britain will devastate trading in what should be businesses’ busiest time of the year. Leaders’ optimism is at least rising from the rock bottom level of our last survey, and news of a vaccine is a reason for cautious hope of recovery in 2021.

“However, this week’s Tier 2 restrictions in England and strict new limits in Wales could be fatal for smaller business in particular, making the case for more relaxed trading conditions and better government support even more urgent.”

The survey also reveals other pressing concerns for the industry.

Only half (51%) of leaders think they are well prepared for the completion of the UK’s transition from the EU at the end of the year. Four in five (80%) leaders think Brexit will have negative impacts on their cost of goods, and two thirds anticipate impacts on overall profitability (65%) and the supply chain (64%).

Brexit concerns also translate to potential staffing issues, with 49% concerned by Brexit-related impacts on the availability of staff.

Following the the pandemic, two-thirds of leaders anticipate either recruiting no (29%) or fewer (38%) new staff in 2021, and the same number (67%) think the difficulty of predicting demand will make labour and inventory scheduling a major challenge next year.

With widespread closures anticipated, there are very mixed investment plans expected in 2021.

More than a third (38%) do not plan to open new sites, but slightly more intend to open either one site (21%) or two to five sites (23%).

“With cautious optimism on the horizon, in the form of a vaccine, there still remain many challenges in the year ahead, such as the availability of goods and labour, after we exit the EU Customs Union,” says Fourth MD Sebastien Sepierre.

“We will continue to work tirelessly with businesses to help them harness the power of technology and data to tackle what lies ahead.”

Related topics: Trends & Reports

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