The research showed 62% of leaders feel optimistic about prospects for their business over the next 12 months, which is an increase of eight percentage points from the last survey in May.
The proportion of leaders feeling confident about the hospitality market in general has climbed by five percentage points quarter-on-quarter, to 45%, according to the Business Confidence Survey from CGA by NIQ and Fourth.
The survey conductors said the figures are a welcome vote of confidence in Britain’s hospitality sector and follow solid trading in 2023 despite less money being in the pockets of customers.
More than four in five (84%) leaders said they operated at a profit in the second quarter of the year, and 37% did so at a higher margin than in the same period last year.
Smaller firms emboldened
The survey also indicated a notable upswing in confidence among smaller businesses. Almost two in five (38%) leaders of independent operators now feel optimistic about prospects for hospitality –sharply up by 15 percentage points from the previous survey.
However, hospitality businesses continue to face severe challenges, including high inflation in key areas. All leaders said they are concerned to some extent about inflation in food and drink, and more than nine in 10 are concerned about energy prices and contracts (96%) and interest rates (91%).
These inflationary pressures are denting businesses’ profits, the survey shows. Two thirds (67%) of leaders say their year-on-year sales growth is less than or equal to their cost increases, while one in nine (11%) leaders say their business remains at risk of failing – though this is three percentage points down from the last survey.
Businesses are also dogged by personnel issues, with 91% of leaders concerned about staff shortages and 92% by increases in national living wage levels. One in nine (11%) roles are currently vacant and open for applications—a quarter-on-quarter increase of two percentage points.
Karl Chessell, CGA by NIQ’s director - hospitality operators and food, EMEA, said: “Leaders’ optimism levels are impressively high at such a difficult time for UK businesses and consumers.
“It’s encouraging to see businesses of all sizes looking to the future with such confidence, and with strong underlying demand for pubs, bars and restaurants the outlook is good.
“However, ongoing high inflation and staffing issues mean trading conditions will remain challenging until at least the end of the year.”
Sebastien Sepierre, managing director – EMEA, Fourth, said: “It’s clear hospitality leaders remain cautious about key issues such as inflation and staff shortages, which can have a major impact on profitability.”