Hospitality leaders’ confidence falls to 23% in Q2

Only 23% of hospitality leaders are now confident about the next 12 months for the general market, according to a new business confidence survey by CGA and Fourth. This is barely a third of the 65% that were confident in their last survey in March. 

The survey also revealed that in spite of solid profitability in the second quarter, severe pressures on operational costs and labour shortages hit proprietor confidences. 

The proportion of leaders feeling confident about their own business, while falling by 15% since the last survey, remains much higher at 53%. This is thought to reflect a greater optimism among the multi-site leaders making up the survey cohort, in comparison to the less financially stable independents which make up much of the wider market.

The survey also dictates that larger businesses remain profitable currently, with 88% of hospitality leaders reporting that their company is currently operating at a profit, while half (53%) say profitability is at or above pre-Covid-19 levels. 

However, business leaders 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 the 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, which is up by 2% since the first quarter of 2022. Competition for staff has also pushed up pay levels by an average of 10% in the last 12 months alone.

Karl Chessell, hospitality operators and food director of CGA, said: “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 the 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 impact of rising costs over the coming year.”

Sebastien Sepierre, managing director of EMEA at Fourth, said: “With the constant barrage of challenges hospitality businesses have to contend with, it is a testament to the skills and dedication of leaders and their teams that so many remain successful in the face of this.

“However, this Survey highlights just how incredibly delicate the situation is. Confidence is dropping among business leaders, whose operations are swamped with pressures from all angles, not least rising costs and labour shortages.”

He added: “Smart solutions and ingenuity are required to navigate these challenging times and ensure hospitality businesses continue to provide customers with the enjoyable social experiences they crave whilst remaining profitable.”