New costs and cautious spending dent hospitality sector confidence
Nearly three in five (59%) leaders say they currently have fewer than six months’ worth of cash reserves
Only a third (34%) of Britain’s hospitality leaders feel confident about prospects for their business over the next 12 months, according to data from CGA.
The proportion of leaders feeling confident about the future of hospitality in general is even lower at 15%.
Both figures are up by just one percentage point from the last Business Confidence Survey in early 2025, and 19 percentage points below the levels of May 2024.
Optimism has been weakened by rising costs, especially through sharp increases to National Insurance contributions and Minimum and Living Wage levels from April.
Four in five (80%) leaders report that wage bills are now “significantly higher” than they were 12 months ago, and nine in 10 (91%) say increased employment costs are a concern for the next 12 months.
On top of these, significant numbers of leaders are concerned by increases in business rates (73%) and inflation in the cost of food and drink (61%).
Confidence has been damaged further by cautious consumer spending in 2025 after a strong end to 2024. A third (34%) of leaders say their first-quarter revenue fell year-on-year, nearly as many as the 37% recording an increase.
Furthermore, nearly a third (31%) of leaders say their profits have fallen year-on-year. Just over a fifth either operated at a loss (15%) or broke even (6%) in the first quarter, treble the number of 5% in the last quarter of 2024.
Nearly three in five (59%) leaders say they currently have fewer than six months’ worth of cash reserves. One in 10 (10%) considers their business is at risk of failure in the next 12 months.
Karl Chessell, director – hospitality operators and food, EMEA at CGA by NIQ, said: “The double whammy of higher costs and softer trading have hit hospitality businesses hard, and it’s no surprise that confidence is running low. It is particularly frustrating that so many of the increases in employers’ outgoings, from labour bills to taxes to inflation to compliance with legislation, are out of their control.
“These costs are choking hospitality businesses and compromising the investment and employment that are so important to the UK economy. The longer term outlook for the sector remains good, but it deserves much better support than it is currently getting.”
