Hospitality leaders’ confidence hits five-year low ahead of Budget

Hospitality leaders’ confidence in their business outlook has fallen to its lowest level in five years as rising costs and weaker consumer spending place fresh strain on pubs, bars and restaurants, according to CGA by NIQ and Sona. 

The latest Business Confidence Survey found that just 26% of leaders feel optimistic about their prospects over the next 12 months. The figure is down 15% from the second quarter of 2025 and marks the lowest reading since October 2020. Only 13% are optimistic about the sector’s overall outlook.

The findings come as operators enter the key Christmas and New Year trading period and ahead of the Chancellor’s forthcoming Budget, where industry groups are seeking targeted support.

The survey indicates heavy pressure on sales and margins across 2025. While 46% of leaders reported year-on-year revenue growth in the third quarter, this compares with 53% in the previous quarter, and most said revenue had either decreased or remained unchanged. A separate CGA RSM Hospitality Business Tracker showed broadly flat like-for-like sales this year, with modest site openings failing to keep pace with inflation.

Profitability has been hit even harder. Nearly a third of leaders said profits had fallen over the past year, outnumbering those reporting growth. Some 11% operated at a loss in the third quarter and only 26% now have cash reserves sufficient to last a year, with 6% holding none.

Operators have responded with a series of cost-cutting and pricing measures. Some 85% have increased menu prices since the government’s Spring Statement, with an average rise of 7.6%. 

More than half have reduced staff numbers or hours, and some have cut spending on training and benefits. Businesses are also pulling back from investment, cutting trading hours or closing sites.

Leaders surveyed identified VAT, business rates and labour costs as the most pressing areas for government action. Around two thirds want a VAT cut for hospitality, a maximum discount on rates multipliers or changes to employers’ National Insurance contributions. Without further support, most say they will be forced to cancel investment, raise prices or reduce staff hours.

Karl Chessell, director at CGA by NIQ, said: “High inflation, low consumer confidence and government policy have all combined to weaken hospitality and compromise its immense contribution to the UK’s economic growth and job creation. Christmas trading will hopefully boost the coffers of vulnerable businesses, but the sector will be hoping that the imminent Budget is used to deliver the targeted support that hospitality needs and merits.”

Paul Watson, VP of hospitality at Sona, added: “This sharp drop in leaders’ confidence underlines just how tough trading conditions have become. Operators are facing mounting pressures on all sides, and the temptation to cut back on hours, teams or investment is completely understandable.

“Guests are also being more selective with their spending, so having a confident, supported and consistent team is crucial to delivering the experiences that keep them coming back. The next few months will demand a careful balance: managing costs sensibly while ensuring teams have the tools, insight and stability they need to perform at their best.”