Hospitality confidence remains low amid rising costs, CGA finds
Four in five respondents said wage bills were significantly higher than a year ago, following April's rises
Rising costs and cautious consumer spending are continuing to erode confidence among hospitality leaders, as just 34% feel confident about their business prospects over the next 12 months, according to new survey data from CGA by NIQ.
The Business Confidence Survey also found that confidence in the sector overall is even lower, at 15%.
Both figures mark only a 1% rise since the previous survey in early 2025, and remain 19% below the levels recorded in May 2024.
Employers cite sharp increases in employment-related costs as a key pressure. Four in five respondents said wage bills were significantly higher than a year ago, following April’s rises to National Insurance contributions and Minimum and Living Wage rates.
Meanwhile, nine in 10 identified employment costs as a major concern for the year ahead.
Additional cost pressures include rising business rates, cited by 73% of respondents, and inflation in food and drink prices (61%).
Demand has also softened since a stronger end to 2024. One in three operators reported a year-on-year fall in revenue in the first quarter of 2025, while 37% saw growth. The figures align with data from the CGA RSM Hospitality Business Tracker, which indicated flat or negative sales for each of the first three months of the year.
More than half (55%) of businesses expressed concern over compliance with the Employment Rights Bill, while one third (34%) flagged the financial impact of Extended Producer Responsibility legislation.
Tightening margins are forcing operational cutbacks. Nearly a third (31%) of leaders reported lower profits year-on-year, while just over one in five either operated at a loss (15%) or broke even (6%) in the first quarter – up from a combined 5% in the previous quarter.
Cash flow concerns are also rising. Nearly 60% of operators said they have fewer than six months’ worth of reserves, while 10% consider their business at risk of failure within a year.
In response, 65% of leaders said they had reduced staff numbers and/or working hours. Many also reported deferring pay rises (40%) or cutting investment in staff benefits and training (both 29%).
However, confidence has improved slightly among independent operators, with optimism rising from 12% to 21% since the last quarter. A majority (57%) also reported a fall in energy costs year-on-year.
