The latest Business Confidence Survey from CGA by NIQ and Sona revealed just 34% of Britain’s hospitality leaders felt confident about prospects for their business over the next 12 months.
The proportion of leaders feeling confident about the future of hospitality in general was even lower at 15%. Both figures were 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—namely through sharp increases to National Insurance contributions and Minimum and Living Wage levels from April, the report showed.
According to the data, collected in May this year, 80% of respondents said wage bills were significantly higher than they were 12 months ago, with 91% reporting increased employment costs were a concern for the next 12 months.
On top of this, significant numbers of leaders were 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, the report stated.
Compromising investment
A third (34%) of leaders said first-quarter revenue fell year-on-year—nearly as many as the 37% recording an increase. This is line with the CGA RSM Hospitality Business Tracker, which indicated negative or fractional growth in each of the first three months of this year.
CGA by NIQ EMEA director hospitality operators and food Karl Chessell 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.”
The Survey, based on data from more than 17k sites, also highlighted challenges around new legislation, with 55% of participants concerned about compliance with the Employment Rights Bill, and a third (34%) anxious about costs connected to the Extended Producer Responsibility (EPR) strategy.
Meanwhile mounting costs have placed further strain on businesses’ margins, as nearly a third (31%) of leaders said profits had fallen year-on-year. Just over a fifth either were operating at a loss (15%) or broke even (6%) in the first quarter—treble the number of 5% in the last quarter of 2024.
This combination of flat sales and increasing costs has weakened the viability of hospitality operators, the survey showed. Nearly three in five (59%) leaders reported they currently have fewer than six months’ worth of cash reserves while one in 10 (10%) considered their business at risk of failure in the next 12 months.
Storm of economic challenges
It has resulted in almost two thirds of leaders reducing the staff count (65%) and / or cut the hours available to their staff. Significant numbers have also deferred pay increases (40%) and reduced spending on employee benefits and training (both 29%).
It comes as trade body UKHospitality (UKH) this week shared concerns regarding the labour market in the UK, after official data indicated a drop in the number of pay-rolled employees.
More positive news from the survey included a quarter-on-quarter increase in the proportion of independent operators feeling optimistic about prospects for their business in the next 12 months, from 12% to 21%. There has also been some relief on energy bills, with more than half (57%) of leaders stating these have decreased year-on-year.
Sona vice president of hospitality Paul Watson added: “The hospitality industry is continuing to endure a storm of economic challenges, stifling growth and draining productivity.
“From a labour standpoint, now more than ever, ensuring that every rota and schedule is fully optimised is incredibly important.
“Having the right digital solutions in place is a game changer – it supercharges decision-making and ensures businesses are operating at peak efficiency, 100% of the time. Now isn’t the time to weather the storm, it’s the time to empower businesses to operate as efficiently as possible in order to help them trade their way out of trouble.”
