Only 37% of leaders feel optimistic about prospects for their business over the next 12 months, data from the latest Business Confidence Survey from NIQ and Zonal reveals.
It is a sharp drop from the figure of 51% in February, when operators were feeling upbeat after robust Christmas and New Year trading. The number of leaders feeling optimistic about the future of hospitality in general also fell over the second quarter – by 10 percentage points to 21%.
The research highlights particular fragility in the independent hospitality sector. Just 16% of leaders of single-site operators are optimistic about the prospects for their business in the next year, with confidence being impacted by factors including the conflict in the Middle East and resulting fuel
price rises and British consumers’ weak confidence, which has reached its lowest level since 2023, according to the GfK Consumer Confidence Barometer.
Slower spending in hospitality
The Business Confidence Survey shows the immediate impacts of slower spending in hospitality, with more than a third (36%) of leaders saying their revenue in the latest quarter fell year-on-year – the highest number since the start of 2024.
Higher costs have meanwhile squeezed margins, with 34% of leaders reporting lower profits.
Inflationary pressures are set to intensify. More than four in five (82%) leaders say they are concerned about higher food and drink prices in the next 12 months, while three quarters (75%) are worried about increased employment costs. Taxes are another major burden, with the large majority of leaders concerned about levels of VAT (73%) and rates (67%).
Karl Chessell, director - hospitality operators and Food, EMEA at NIQ, says the dip in hospitality leaders’ optimism was ‘inevitable’ after geopolitical turmoil and domestic economic concerns in the second quarter of the year.
“The confidence of operators and consumers alike is bumping along the bottom, and relentless pressures on costs are threatening the future of businesses and jobs across the sector,” he says.
“The case for Government help on tax, employment and costs is now more compelling than ever. Support would unlock immediate economic benefits by freeing up businesses to invest in their venues and people, and to revisit prices for their guests.
“Hospitality is at the heart of the UK’s economy, job creation and local communities, and the arrival of a new Prime Minister is an opportunity to give the sector the support it deserves.”