The exclusive poll shows 34% of leaders feel confident about prospects for the hospitality market over the next 12 months—down by seven percentage points from February figure of 41%. The proportion of leaders who feel optimistic about prospects for their own business in the next year has meanwhile fallen by four percentage points, from 57% in February to 53% now. It is the second quarter-on-quarter drop in leaders’ confidence in a row, following four successive quarters of growth.
Revenue and average spend increase
However, the Business Confidence Survey provides grounds for cautious optimism about trading for the rest of 2024. Two thirds (65%) of leaders say revenue in the first quarter of 2024 was higher than in the first three months of 2023, while only 14% said it was lower. Well over a third (39%) of leaders say consumers’ average spend per visit has increased over the last six months, though only a quarter (24%) report growth in footfall and two thirds (66%) report consumers cutting back on the number of drinks they order while out —suggesting that many people are drinking or eating less on visits than they did previously, but paying more when they do go out.
Some costs ease, others still high
Business confidence has been weakened by pressure on wage costs, and nearly all leaders said these had significantly (73%) or slightly (24%) increased over the last 12 months. Wages rose by an average of 7.9% between February 2023 and February 2024, and by a further 8.9% in April following increases to the National Living Wage. More positively, higher pay has helped to cut vacancies, with only 6% of roles now open—down from 10% in February.
While pay remains a significant burden, some other cost pressures are easing, the Business Confidence Survey shows. Prices remain high, but the number of leaders reporting decreases in energy costs has more than quadrupled quarter-on-quarter, from 9% to 38%. Those facing significant increases in food and drink costs have fallen from 50% to 31%.
Investment confidence rises
Separate CGA research has provided more signs of recovery in the sector. The CGA RSM Hospitality Business Tracker shows leading managed restaurant, pub and bar groups achieved above-inflation like-for-like sales growth of 5.2% in March, while CGA’s Cost of Living Pulse has revealed a cautious uptick in consumers’ spending confidence this year.
Positive trends are starting to speed up investment plans, the new Business Confidence Survey shows. Half (51%) of leaders say they plan to increase investment over the next year—more than double the number (20%) who will reduce it.
Karl Chessell, CGA by NIQ’s director – hospitality operators and food, EMEA, said: “While confidence levels in hospitality have fallen slightly since strong Christmas trading, it’s encouraging to see that revenue, consumer spending and some cost pressures are generally moving in the right directions. Increasing investment is another welcome sign that leaders are upbeat about long-term prospects in hospitality. Costs remain very high in key inputs like pay, and there is some way to go before people’s spending confidence is back to pre-COVID levels. But these figures give us cause for cautious optimism that trading will continue to pick up over the rest of 2024.”
Karl Chessell, CGA by NIQ’s director
The Business Confidence Survey from CGA by NIQ drew responses from leaders at CEO, MD, chair, board and other senior management levels, with combined oversight of nearly 10,000 hospitality sites. The research was conducted in April 2024.
