Confidence is starting to return to the eating and drinking out sector, despite a host of pressures on the market, says the latest CGA Fourth Business Confidence Survey, carried out in May by business insight consultancy CGA in partnership with hospitality software provider Fourth.
This should signal a positive outlook for catering equipment distributors and manufacturers looking to provide more services and appliances to the hospitality sector.
However, there remains a gap between the optimism that leaders of Britain’s restaurant, pub and bar groups have about their own businesses and their confidence in the market as a whole. The survey of 160 senior management figures from the industry revealed that 75% of company leaders are now optimistic about the prospects for their own business over the next 12 months – 11 percentage points more than at the time of the last confidence survey in February.
There was also an upswing in bosses’ confidence for the overall market, although the survey found that less than half (47%) are upbeat about prospects for the wider eating and drinking out sector over the next 12 months. This also represents an 11 percentage points increase on 3 months earlier, and both figures are the highest recorded by the survey since February 2016.
However, they are still below the levels seen before the Brexit vote. In February, three quarters of leaders said their businesses had been adversely affected by the consequences of the referendum.
CGA’s CEO Phil Tate said: “The more upbeat tone of the survey appears at odds with the recent news of some high profile restaurant closures in the first half of this year, driven by business challenges including rising food, people and property costs and the uncertainty surrounding Brexit.
“But it might be because of this market shake out, coupled with more stable food prices, that business executives are now gaining more confidence.”
As one survey participant observed: “The [restaurant] market is sorting itself out like the pub industry did a few years ago. We are over saturated with some struggling brands. Once they leave, which is happening, there will be opportunities for better brands.”
Another said: “An unsettled market presents opportunities for established operators with a clear offer.”
Ben Hood, CEO of Fourth, said: “In the face of challenging external headwinds in rising costs of both labour and inventory, there remains a cohort of outstanding operators who are constantly looking inwardly at their businesses and investing in the marketing and technology they need to increase efficiencies and improve their offer and the customer experience. There will always be an appetite for spending on food and drink among UK consumers, it’s ingrained in our culture, and these slick, streamlined businesses are in pole position to thrive over the coming years.”
Tate noted that the continuing gap between market and individual business confidence was a cause for concern as it highlighted an underlying nervousness that might affect corporate investment and growth decisions. But with CGA data indicating that people continue to go out to eat and drink, the results show that there is room for distinctive, customer-focused brands to succeed.
Tate concluded: “After a tough start to 2018, this latest Business Confidence Survey is a welcome reminder that hospitality remains an essentially upbeat industry. CGA’s research shows that like-for-like sales growth is modest, and that many restaurant, pub and bar operators have scaled back their new openings plans – but conditions that challenge some businesses can also bring opportunities for others.”