Optimism remains high but major challenges 'keep hospitality fragile'

By James McAllister

- Last updated on GMT

Optimism remains high but major challenges 'keep hospitality fragile'

Related tags: business confidence, Coronavirus, Cga, Fourth

Confidence among business leaders dipped slightly in the third quarter, according to new data from CGA and Fourth, but optimism across hospitality remains high following the summer trading period.

The third-quarter Business Confidence Survey shows that 70% of restaurant, pub and bar leaders feel optimistic about their businesses’ prospects for the next 12 months. The figure reflects 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.

Just over two thirds (69%) of businesses are currently trading at a profit — more than four times the 16% who were doing so three months ago; while two in five (39%) leaders say they are performing ahead of expectations, compared to 23% trading below expectations and 38% in line.

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.

"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," says Karl Chessell, CGA’s director - hospitality operators and food, EMEA.

"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 survey goes on to highlight the role of technology in hospitality’s restart this year.

More than nine in 10 leaders say tech has been either 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.

“The ongoing rise in confidence throughout the sector is, of course, very welcome indeed, although the road ahead is still shrouded in a veil of uncertainty," says Sebastien Sepierre, managing director – EMEA, Fourth.

"The ongoing staffing and supply chain issues are continuing to heavily impact business performance and it remains unclear how long these challenges are going to ravage the sector. What is clear, however, is that the digital transformation journey is set to continue across the industry, helping businesses streamline, perform better and drive efficiencies.

"We’ll be continuing to work hand-in-hand with hospitality operators to help them harness the power of technology to tackle the myriad workforce challenges as we negotiate this crucial trading period.”

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