The June poll of around 140 senior hospitality industry figures found that almost two thirds (61%) of drink-led operators were optimistic about the pub and bar sector over the next 12 months – nearly twice as many as food-led business leaders (33%).
However, despite pub and bar operators remaining upbeat, CGA and Fourth’s findings revealed that the gap between the number of business leaders confident in their own ventures' prospects and those with faith in their sector in general had narrowed slightly over the last quarter.
Less than half (41%) of hospitality bosses across the pub, bar and restaurant sectors were either fairly or very optimistic about their sector over the coming year – a 2% increase from February but down six percentage points year-on-year.
Yet, leaders were more positive about their own business’ prospects than they were about broader market conditions – with 65% fairly or very optimistic about the year ahead. However, this figure was down both quarter-on-quarter (from 68%) and year-on-year (from 75%).
This fragile market confidence can be attributed to a plethora of pressures facing the sector including rising labour, property and food costs, intense market competition and Brexit uncertainty according to CGA and Fourth’s poll - which follows a half-year spell in which more than a quarter (29%) of leaders reported that their business has performed below expectations.
While a hospitality sector deal to prepare Britain for an extra 9m visitors per year was recently lauded as an important step for the pub and hospitality sectors by industry bodies and pubcos, these findings come against the backdrop of a laboured and confused Brexit process, a drawn-out contest between Jeremy Hunt and Boris Johnson to determine the leader of the Conservative Party and next prime minister and a swathe of cost pressures facing the industry.
The tables have turned
“The patchy optimism among food-led business leaders confirms that 2019 has been a rough ride, with casual dining operators buffeted by ferocious headwinds and several high-profile brands struggling,” CGA group chief executive Phil Tate explained.
“But leaders of drink-led businesses clearly feel they have much more to look forward to – a sign that after many years of pub closures and restaurant expansion, the tables have turned.”
CGA and Fourth Business Confidence Survey also shed light on the need for investment if hospitality brands are to gain competitive edge, with a third (33%) of leaders outlining more refurbishment plans across more sites this year than last.
Tate added: “Our survey suggests that for many big brands in the sector, the aim for the second half of 2019 will be to preserve market share and invest in current assets ahead of new openings.
“With consumer footfall and spend likely to be flat at best, and such intense competition for loyalty, all operators will need to keep their offer resolutely focused on the fundamentals of hospitality and the needs of guests.”
Growing confidence gap
Discussing the survey’s findings Ben Hood, CEO of Fourth, added: “It’s fascinating to see something of a confidence gap emerging in the outlooks of operators from different types of businesses, which is clearly a product of the extremely challenging conditions buffeting some parts of hospitality.
“What is also resoundingly clear from industry leaders is a razor-sharp focus on labour productivity, no matter what type of business they lead.
“The research graphically illustrates what we know from our many working partnerships with hospitality businesses: productivity and delivering efficiency gains is ‘mission critical’ for hospitality businesses in this market, and there is clear momentum in this area, with operators harnessing technology to drive efficiencies and defend profitability.”