Hospitality leaders' confidence drops amid cost-of-living crisis
The confidence of restaurant, pub and bar leaders has tumbled over Q2 of 2022, hindered by soring costs for both businesses and consumers.
CGA and Fourth's second-quarter Business Confidence Survey reveals that only 23% of sector leaders are now confident about prospects for the general market over the next 12 months – barely a third of the total 65% who said the same in the survey in March.
The proportion of leaders feeling confident about their own business, while falling by 15% since the last survey, remains much higher at 53%. This may reflect a greater optimism among the milti-site leaders making up the survey cohort, in comparison to the less financially stable independents which make up much of the wider market.
The Business Confidence Survey shows most of these larger businesses remain profitable for now. Almost nine in 10 (88%) leaders report that their company is currently operating at a profit, and half (53%) say profitability is at or above pre-Covid-19 levels.
However, bosses anticipate that cost inflation will compromise consumers' spending. On average they predict a 6% drop in sales and a 12% impact on profit margins over hte next 12 months.
The survey also highlights the labour shortages that continue to beset hospitality. Leaders say an average of 11% of their roles are currently vacant – up by 2% since Q1. Competition for staff has pushed up pay levels too, by an average of 10% in the last 12 months alone.
Karl Chessell, director of hospitality operators and food, comments: "After a solid first half of 2022, this survey shows the squeeze on hospitality businesses is tightening. The full impact of the cost-of-living crisis remains to be seen, but leaders are aware that it is likely to reduce guests' visits over the rest of year. While many hospitality venues currently remain profitable and popular, businesses that have been left fragile after Covid-19 lockdowns will now be seriously concerned by the impcat of rising costs over the coming year."