Concerns over consumer confidence, rising product costs and staff availability head the list of short-term and long-term worries for senior executives.
The survey of 80 board-level directors, which was featured in yesterday’s Mail on Sunday newspaper, shows that optimism about the market has crashed. Just 15% of operators are upbeat about market prospects in the next six months, down from the 75% that registered market optimism in January, as part of the annual CGA Peach Business Leaders survey.
“Looking longer term, the picture is slightly brighter, but only slightly, with 30% of operators optimistic about the market over the coming two years,” said Charlie Mitchell, senior consumer research manager at CGA Peach’s parent company, CGA Strategy. In contrast, around 40% leaders are pessimistic both for the short and long-term.
When it comes to their own businesses, nearly two thirds (65%) of bosses believe that Brexit will have a negative effect on their operations.
In all, 24% are optimistic for their own business over the next six months, with 37% are optimistic for the coming two years, while 23% are pessimistic both for the short and long term, with the rest neutral.
“Again, those figures are far lower than they were when we ran our Business Leaders’ Survey in January, when 83% of operators were optimistic about prospects for their own business’ in 2016,” added Mitchell.
“Not a single operator has increased their expectations after the referendum, either in the short or long term- 44% have decreased business expectations for the rest of 2016, with 53% lowering forecasts for the next two years,” he added.
Most bosses predict negative consequences of the vote, including decreased staff availability, a falling pound, increases in raw material costs and a drop in consumer confidence.
Six-out-of-10 operators believe that consumers will go out less frequently over the next six months, while 48% think they will spend less when they do visit.
Most cited effects on the out-of-home market of the decision to leave the EU are:
- Increase in the cost of raw materials/ingredients (76% agreeing)
- Drop in consumer confidence (74%)
- Decreased staff availability (73%)
- Falling of the pound (71%)
- A skills shortage in the out of home market (69%)
Rising raw material costs and falling customer confidence are the leading short-term concerns, with availability of people the number one long-term worry.
“So it is perhaps not surprising that staff training and employee engagement are among the top five areas that operators are most likely to concentrate investment on, according to the survey, along with innovation, customer service and digital marketing,” added Mitchell.
Business investment will be affected by the Brexit vote, with 27% of operators saying they are now less likely to consider an acquisition, against just 4% who say they are more likely, and with 21% of bosses planning to reduce investment in their businesses. However, half (49%) do not plan to change their investment plans, and 5% plan to increase investment, with 25% ‘unsure’.