Confidence in the UK eating and drinking-out market dips

By Helen Gilbert

- Last updated on GMT

Vote has caused turmoil: 'confidence was sky high' before Brexit vote
Vote has caused turmoil: 'confidence was sky high' before Brexit vote

Related tags European union

Mounting costs and uncertainty around Brexit has led to food service chiefs revising their once optimistic views on future trade, new research has found.

Only 34% of 160 chief executives, chairmen and managing and senior directors polled in the CGA’s Q3 2017 Business Leaders’ Confidence Survey, said they were optimistic about prospects for the next 12 months – down from 43% in May.

More than three quarters said their business has been affected by food cost increases (81%), and 70% confirmed they had passed these on to consumers via menu price rises in the last quarter.

The survey also showed that 78% had been hit by increased business rates, 70% had experienced rising staff costs and the impact of terrorism had affected 45% of respondents.

There was also widespread concern that the most severe consequences of Brexit had yet to be felt – almost three quarters (71%) said the decision to leave the EU has already had a negative impact on their business.

In addition, the findings flagged up worries about possible market saturation, as well as fears over the public’s likelihood to continue to go out to eat and drink.

“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,” CGA vice-president Peter Martin said.

“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.”

Association of Licensed Multiple Retailers chief executive Kate Nicholls insisted the drop in employer confidence underlined the need for Government action to “reassure business and provide stability and clarity”.

“Fears of future Brexit-related impacts appear to be as much of a problem as other legislative and financial burdens already taking their toll. Decisive action from the Chancellor to reduce wage and property costs can provide employers with a boost, but we also need reassurance from DEXEU (Department for Exiting the European Union) that negotiations and trade deals will provide UK businesses with the flexibility and stability they need.”

However, the report also found that two thirds of business leaders were positive about prospects for their own company over the next 12 months – the same number as in May – and more than three quarters (76%) claimed their business’s performance had been in line with, or above, expectations so far in 2017.

Separate CGA research has shown a 46% increase in managed restaurants in Britain in the past five years, but like-for-like sales growth of only 1.3% in the past 12 months.

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