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Business Optimism Improving Across UK Eating and Drinking-out Market

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Business Optimism Improving Across UK Eating and Drinking-out Market

Business Optimism Improving Across UK Eating and Drinking-out Market
December 20
08:57 2019
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Optimism in the eating and drinking-out market has risen to its highest point for 18 months, the latest Business Confidence Survey reveals – but senior executives remain wary of squeezed consumer spending and rising costs as 2020 nears. The exclusive quarterly survey of business leaders across the UK pub, bar and restaurant market indicates that 44% of are optimistic about prospects for the eating and drinking-out sector over the next 12 months. That figure is substantially up on 30% in the last survey three months ago, and is at the highest point since May 2018.

Operators’ confidence about prospects for their own businesses has risen quarter-on-quarter too, by six percentage points to 64%, the survey, produced by leading insight consultancy CGA in association with hospitality technology specialist Fourth, reveals.

While optimism has improved, it is still well below levels recorded by the survey before 2016’s EU Referendum – an indication that uncertainty about Brexit continues to dampen the sector’s confidence.

Leaders remain nervous about consumer footfall and spending in 2020, the survey shows. Just over half (53%) think consumers will eat and drink out less often in the next six months, and only 25% anticipate an increase in average spend, with 32% predicting spend to fall. The poll identifies further concerns about rising people, property and food costs.

“After a tough 2019 for many out-of-home eating and drinking businesses, the signs of cautious optimism in this survey are very welcome,” says CGA group chief executive Phil Tate. “The sector still faces a host of challenges – many of which, like increased costs, are out of their control. But this is a resilient and innovative industry, and even during testing times there are big opportunities for operators with the right concept with the right price and the right consumer focus. If businesses can get some economic stability and the right support from government, there’s a lot to look forward to in 2020.”

The Business Confidence Survey also highlights leaders’ priorities for the year ahead, including the importance of talented and engaged staff. Three quarters (75%) of respondents consider service to be a key driver of consumers’ choice, making it the leading factor ahead of value for money. The environment is set to be another key issue in 2020, with 76% of leaders citing a sustainable food chain as important to their brand values.

Simon Bocca, Fourth’s Chief Operating Officer, says: “It is encouraging to see some green shoots of optimism and I hope this will gather momentum with a pro-business election result. This has the potential to unlock industry investment and a corresponding uptick in consumer confidence. However, it’s clear there are three Ps that remain front of mind for our business leaders – people, profit and politics.

“With people, the market is absolutely unified in the sense that the best teams will make the difference and those businesses that can attract, keep, engage and train the right people to deliver the right guest experience every time are best placed to win. In terms of profitability, the rising tide of cost inflation across every line of the P&L, notably for workforce, goods and property, keeps coming and the industry is waging a war to defend and grow profitability, daily. As for politics: while a confidence bounce from the election is encouraging, the industry will be mindful of the road bumps ahead, knowing that Brexit and 2020 will bring opportunities and challenges in equal measure.”

The CGA Fourth Business Confidence Survey is based on responses from around 130 leaders working at CEO, MD, Chairman, Director or other senior management level. The survey was carried out in November 2019.

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