Business leaders front up to challenges in UK eating and drinking out market

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Two thirds of senior executives in the eating and drinking out sector remain upbeat about prospects for their business, while acknowledging significant challenges in the market, the latest Business Leaders’ Confidence Survey from CGA reveals.

The exclusive poll found that 66% of respondents were positive about prospects for their own company over the next 12 months—the same proportion as in CGA’s last confidence survey in May 2017. In addition, three quarters (76%) of leaders told the survey that their business’ performance had been in line with, or above, expectations so far in 2017.

However, this is in contrast to their optimism about the general trading environment – which has slipped since the start of this year. Asked about their confidence in the out-of-home market as a whole, only a third (34%) of leaders said they were optimistic about prospects for the next 12 months—down from 43% in May.

The survey, full results of which are available by request from CGA, highlighted widespread concerns about threats to the market including spiralling input costs and Brexit. Businesses are facing something of a perfect storm of challenges, the survey confirmed. More than three quarters of leaders said their business has been affected by increases in food costs (81%), and nearly as many (70%) said they had passed these increased costs on to consumers via menu price rises in the last quarter. High numbers of business leaders said they had been hit by increased business rates (78%), increased staff costs (70%) and the impact of terrorism (45%).

Falling confidence also reflected uncertainty about Brexit and its subsequent triple impact on consumer confidence, import costs and availability of European workers. Nearly three quarters (71%) of leaders said the decision to leave the EU had already had a negative impact on their business, and there was widespread alarm that the most severe consequences of Brexit were still to be felt.

The poll flagged up concerns about possible market saturation, as well as the public’s likelihood to continue to go out to eat and drink.

Separate research from CGA’s suite of services has shown a 46% increase in managed restaurants in Britain in the last five years, but like for like sales growth of only 1.3% in the last 12 months. Restaurant openings have been driven by new and fast-growing concepts in particular, and the Business Leaders’ Confidence Survey shows that optimism is much higher among leaders of these fledgling operators than those of established big brands. One respondent commented: “There is still plenty of room for growth in the market for concepts that provide exceptional value for money and consistency.”

CGA vice president Peter Martin said: “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. 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,” Martin added.

“The good news is our findings is that two thirds of business leaders are upbeat about their own prospects, which is a welcome corrective to the doom and gloom, and a reminder of the intrinsic dynamism and ambition of large parts of Britain’s eating and drinking out industry.”

CGA’s Business Leaders’ Confidence Survey is based on a poll of 160 chief executives, managing directors, chairmen and other senior directors and management in the out of home eating and drinking sectors, ranging from big company bosses to entrepreneurial start-ups.

CGA’s expert and comprehensive analysis of the survey, including a host of crucial insights for operators and suppliers across the sector, is available by request. Contact 

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