Just over a quarter (26%) felt optimistic about the prospect for their business over the next 12 months, the latest Business Confidence Survey, from CGA by NIQ and Sona revealed.
This was a 15 percentage point drop compared to the previous quarter. The poll, conducted at the start of Q3 2025, also showed confidence in the future of the sector more broadly has slipped down to 13%.
The figures mark two quarters of improved sentiment in 2025 and take confidence to levels last seen in October 2020, when Covid restrictions were hammering trade.
While 46% of business leaders reported year-on-year revenue growth in Q3, this was down from 53% in the previous quarter. Most reported either flat (29%) or falling sales (25%).
Additionally, a third (32%) of leaders said profits had decreased year-on-year, compared with 30% that recorded an increase. Around 11% of leaders operated at a loss in Q3.
Tough decisions
Cash reserves were also at their lowest level in years, with just 26% holding enough to last 12 months and 6% holding none at all.
Cost pressures have also forced operators to make tough decisions, with 85% having raised menu prices, averaging a 7.6% increase, almost double the current rate of inflation.
Meanwhile, more than half (55%) have cut staff numbers or hours, with hours reduced by an average 7.3%. Many have also trimmed training (19%) and employee benefits (23%).
Others have been left with no choice but to cancel investment (53%), reduce trading hours (36%) or close altogether (21%).
It comes at a critical time, as operators head into what should be a vital Christmas and New Year trading period.
Sona vice president of hospitality Paul Watson said: “This sharp drop in leaders’ confidence underlines just how tough trading conditions have become.
“Operators are facing mounting pressures on all sides, and the temptation to cut back on hours, teams or investment is completely understandable.
“But when margins are already tight, every peak period becomes even more valuable – and without the right people in place, those vital revenue moments can slip away.
Targeted support
“Guests are also being more selective with their spending, so having a confident, supported and consistent team is crucial to delivering the experiences that keep them coming back.
“The next few months will demand a careful balance: managing costs sensibly while ensuring teams have the tools, insight and stability they need to perform at their best.”
The findings also demonstrate the need for targeted support in the Chancellor’s upcoming Budget.
Around two thirds of leaders called for a VAT reduction (70%), the maximum possible discount on rates multipliers (65%) and changes to employers’ National Insurance contributions (65%).
Without more support, the majority of leaders said they would have to cancel investment (69%), increase prices (63%) or make further cuts to staff hours (63%).
CGA by NIQ hospitality operators and food director EMEA Karl Chessell added: “The latest dip in leaders’ confidence reflects the exceptionally challenging environment they have faced in 2025.
“High inflation, low consumer confidence and Government policy have all combined to weaken hospitality and compromise its immense contribution to the UK’s economic growth and job creation.
“Christmas trading will hopefully boost the coffers of vulnerable businesses, but the sector will be hoping the imminent Budget is used to deliver the targeted support that hospitality needs and merits.”
