Restaurant bosses' confidence in market slips but they remain upbeat about own prospects
The gap between the level of confidence that executives in the eating and drinking out market feel in relation to their own business and how they regard the market in general has widened, as they expect rising costs and uncertainty around Brexit to hit their competitors.
That's according to the latest research from CGA for its Business Leaders' Confidence Survey.
The poll found that 66% of respondents were positive about the prospects for their own company over the next 12 months - the same proportion as in CGA's last confidence survey in May 2017.
Three quarters (76%) told the survey that business performance had been in line with or above expectations so far in 2017.
However, when it came to their attitude about the general trading environment, only 34% of leaders said they were optimistic about prospects for the next 12 months, down from 43% in May.
Businesses are facing a series of challenges. Some 81% said they had been affected by increases in food costs, and nearly as many (70%) said they had passed these increased costs on to consumers via menu price rises in the past quarter.
A total of 78% of business leaders said they had been hit by increased business rates, while 70% had seen increased staff costs and 45% had been hit by the impact of terrorism.
Nearly three quarters (71%) said that the decision to leave the European Union (EU) had already had a negative impact on their business and there was alarm that the most severe consequences of Brexit were still to be felt.
Meanwhile, separate research showed that there had been a 46% increase in managed restaurants in Britain during the past five years but that there had only been like-for-like sales growth of 1.3% in the last 12 months.
Restaurant openings have been driven by new concepts in particular and the survey showed that confidence among fledgling operators was higher than that of established operators.
CGA vice president Peter Martin said: "Our latest Business Leaders' Confidence Survey is a fascinating snapshot of a sector that, in general, is determined to ride out the stiff headwinds it faces. Food, property and staff costs are rising, Brexit negotiations are causing havoc with exchange rates, imports and staffing, and consumer confidence remains patchy.
"Before the Brexit referendum confidence in the market was sky high. It plummeted straight after the vote, and although confidence in both leaders' own businesses and to a lesser extent the general market have recovered, they are not back to early 2016 levels. The worrying aspect is the gap between market and company optimism and the effect this uncertainty might have on decision-making, especially around investment and growth," Martin added.
"The good news is our findings is that two thirds of business leaders are upbeat about their own prospects, which is a welcome corrective to the doom and gloom, and a reminder of the intrinsic dynamism and ambition of large parts of Britain's eating and drinking out industry."
The CGA Business Leaders' Confidence Survey is based on a poll of 160 chief executives, managing directors, chairmen and other senior directors in the out-of-home eating and drinking sectors.
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