Confidence in the hospitality sector continues to fall amid rising costs
Just 8% of leaders of multi-site businesses feel confident about the sector over the next year, a sharp drop from 23% in the last survey in June, according to new research from CGA by NielsenIQ and Fourth reveals.
The figure is a huge decrease from March this year when 65% of business owners has confidence in the sector’s progress, with rising energy costs and inflation the main causes for the drop.
The proportion of leaders feeling confident about prospects for their own business over the next 12 months is higher at 29%, according to the October Business Confidence Survey. This, says CGA and Fourth, reflects the greater resilience of multi-site operators than independents, that have borne the brunt of closures in recent months. However, this number has also dipped, from 53% in the last Business Confidence Survey.
“Hospitality businesses have shown remarkable resilience since the start of the pandemic, but these figures show they are facing their greatest challenges yet. With no sign of relief on inflationary pressures for firms and consumers alike, sales and margins will be under severe strain and thousands of companies are now vulnerable. Political upheaval and market shocks have only made things worse, and urgent and targeted government support is needed to sustain the sector through this very difficult period,” says Karl Chessell, CGA’s director - hospitality operators and food.
Businesses are struggling with escalating costs, with 86% of leaders reporting significant inflation in the prices of both energy and food. While 80% of leaders say their business is still operating at a profit, more than half (53%) report margins lower than they were before the Covid-19 pandemic. Thirteen per cent of businesses expect to be either running at a loss or unviable by the end of this year.
“There can be no denying that the hospitality landscape is in a delicate state at present, as reflected by the data outlined in this survey,” says Sebastien Sepierre, managing director, EMEA, at Fourth.
“Sector businesses are currently facing myriad challenges, including 40-year high inflation, spiralling energy costs, instability in the markets and an understandably cautious consumer base. Wider support is needed now, as without it, sector confidence will remain low, and much of the industry will simply be unable to weather the storm in the months ahead.”
