Post-Brexit worries hit market confidence
Confidence among the leaders of Britain's restaurant, pub and bar groups has plummeted in the wake of the vote to leave the European Union, according to research by CGA Peach.
A survey by the business analyst found concerns over consumer confidence, rising product costs and staff availability headed the list of worries for senior executives.
The survey of 80 board-level directors found just 15% of operators are upbeat about market prospects in the next six months, down from the 75% that registered market optimism in January as part of the annual CGA Peach Business Leaders Survey. Just under a third (30%) of operators said they were optimistic about the market over the coming two years, while 40% were pessimistic both for the short and long-term.
When it comes to their own businesses, nearly two-thirds (65%) of bosses believe that Brexit will have a negative effect on their operations. In all, 24% are optimistic for their own business over the next six months, with 37% are optimistic for the coming two years, and 23% are pessimistic both for the short- and long-term, with the rest neutral.
In the January Business Leavers Survey, 83% of operators were optimistic about prospects for their own business in 2016. In the latest survey 44% had decreased business expectations for the rest of 2016, with 53% lowering forecasts for the next two years.
Six out of 10 operators believe that consumers will go out less frequently over the next six months, while 48% think they will spend less when they do visit.
The most cited effects on the out-of-home market of the decision to leave the EU were:
- Increase in the cost of raw materials/ingredients (76% agree)
- Drop in consumer confidence (74%)
- Decreased staff availability (73%)
- Falling of the pound (71%)
- A skills shortage in the out of home market (69%)
Rising raw material costs and falling customer confidence are the leading short-term concerns, with availability of people the number one long-term worry.
27% of operators said they were now less likely to consider an acquisition, against just 4% who said they were more likely, and 21% of bosses planned to reduce investment in their businesses. However, 49% do not plan to change their investment plans, and 5% plan to increase investment, with 25% ‘unsure'.
Charlie Mitchell, head of consumer research at CGA Peach's parent company CGA Strategy, said: "Not a single operator has increased their expectations after the referendum, either in the short or long term."
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