Brexit progress provides confidence boost for restaurant, pub and bar market

Optimism among business leaders in the out-of-home eating and drinking sector is at its highest level for nearly four years, says the exclusive Business Leaders Survey from CGA and Fourth.
Download CGA Fourth Business Leaders Survey Report 2020

CGA’s latest Business Leaders’ Survey revealed that optimism among business leaders in the out-of-home eating and drinking sector was at its highest level for nearly four years when the survey was conducted in early February.

The exclusive poll of over 170 bosses of pub, restaurant and bar businesses, run in partnership with hospitality technology specialists Fourth, came after Britain’s exit from the EU but before concerns over coronavirus and the Government’s immigration policy hit the market.

Despite more certainty due to the fact that Brexit is happening, post-Brexit concerns about workforce availability, costs and future trade tariffs were still dampening industry expectations for 2020.

The 2020 Business Leaders’ Survey, from CGA and Fourth, showed that 60% of senior executives were optimistic about prospects for the sector in February – a leap of 16 percentage points on CGA’s last confidence survey in November, to the highest point since the EU Referendum of mid-2016. More than four in five (83%) leaders were confident about prospects for their own business—a quarter-on-quarter rise of 19 percentage points.

The upswing reflects greater clarity around Brexit and renewed optimism about consumer spending. The proportion of leaders who said they were concerned about consumer confidence over the next 12 months had fallen from half (53%) at the time of the 2019 Business Leaders’ Survey to a third (34%) now.

But that confidence is being undermined by the government’s plans for post-Brexit immigration rules, which have caused widespread alarm about a workforce that depends heavily on overseas staff. The survey—carried out before the proposals were announced—found that 90% of respondents think immigration levels and controls will be a significant issue for the sector in 2020.

There were also concerns about cost pressures, with nearly all (96%) leaders thinking pay, led by an increase in the National Living Wage, would be a significant issue for the sector in 2020. Well over half were also concerned about the challenges of business rates (69%), potential tariffs and trade deal impacts (60%) and food costs (60%).

Karl Chessell, Business Unit Director for Food and Retail at CGA, said: “The effect of more recent worries, like coronavirus, on business sentiment is yet to be gauged. Our monthly sector sales figures for February from the Coffer Peach Business Tracker, which we will be releasing next week, will give us a better idea of the immediate impact coronavirus as well as the recent flooding in the country has had to the eating and drinking out market. We will also watch with interest if sentiment changes amongst hospitality leaders in our next quarterly confidence survey in May.

“Our Business Leaders’ survey shows we always need to temper optimism with some caution. Cost pressures are squeezing margins from all directions, and the new immigration proposals are a reminder that the next big challenge for this sector is never far away, be it policy, or indeed volatile consumer confidence in the face of coronavirus or changeable weather. Hospitality is a dynamic industry that makes a massive contribution to the UK’s economy, but our leaders need better support from the government on big issues like recruitment, pay, rates and trade to realise their full potential. Operators will have to stay vigilant, flexible and resolutely focused on consumer experience if they are to win market share in this ultra-competitive market in 2020, and the survey results suggest that they will.”

Mike Shipley, VP of Analytics at Fourth said: “Despite an uptick in confidence, an influx of cost headwinds, particularly the cost and supply of labour, not to mention the ongoing coronavirus situation, present a sizeable challenge for the industry to manage over the coming months. Our latest insight indicates that the industry is going to experience a 2-3% increase in labour costs over the coming months as the new National Living Wage threshold approaches. Furthermore, with increased uncertainty around the continued supply of foreign labour, which makes up 53% of our workforce, it looks like the business leaders concern around escalating labour costs has come to fruition.

“In the face of this, rigorous productivity and procurement programmes have fast become an imperative, as operators look to better manage their two primary costs of goods and labour. The businesses who achieve this best, will be the ones who can marry the harmony of man and machine (technology). But it is only by working collectively as an industry and lobbying through the right channels that the root of these challenges can be tackled.”

CGA’s Business Leaders’ Survey received responses from 174 industry leaders working at CEO, Chair and director level and was undertaken between 28th January and 18th February 2020. The full findings from the survey, including in-depth insights into market trends and major industry issues, are available now for download. For more information about the Survey and how its findings can support all businesses’ planning in 2020, please contact

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