The exclusive poll, conducted in partnership with CPL Online, finds that around two-thirds (68%) of leaders are optimistic about prospects for their business over the next 12 months—five percentage points more than at November 2018. But the number of leaders feeling optimistic about prospects for the market, in general is significantly lower at 39%—flat on November.
Patchy confidence levels are prompting leaders to scale back their expansion plans, the Survey finds. Only a quarter of leaders (24%) are planning to open more than five new sites this year—barely half the 45% who intended to do so at the time of CGA’s 2016 survey.
The Business Leaders’ Survey identifies a notable contrast in confidence between the pub and restaurant sides of the sector. More than half (53%) of leaders of drink-led operators say they feel optimistic about the general market in 2019, compared to only a third (33%) of food-led business bosses.
Two in five (40%) of all leaders say their business has traded ahead of expectations in the last six months—14 percentage points higher than at last year’s survey. But with CGA’s Coffer Peach Business Tracker indicating like for like sales growth of just 0.8% for managed pub and restaurant groups in 2018, this may be more a reflection of leaders’ relatively low expectations for 2019 than of strong trading.
The Survey reveals a complex set of dynamics at play in the market in early 2019, and several reasons for caution among business leaders. Brexit is causing significant uncertainty, and with the availability of back of house staff a key concern, the UK’s departure from the EU is likely to add to this particular anxiety. Delivery is meanwhile viewed as a double-edged sword, with benefits of incremental sales but concerns about its negative effect on brand perception.
Healthy eating, sustainability, technology and the importance of the all-round experience are among the other big trends that the Survey indicates will be at the top of leaders’ in-trays in early 2019. But as well as emphasising the need to understand these trends, the Survey stresses the importance of consistently delivering on the fundamentals of hospitality, including service and food and drink quality.
Phil Tate, group chief executive of CGA, said: “Our Business Leaders’ Survey reveals an industry caught between instinctive confidence for growth and caution about the challenges they face. It is encouraging to find that more than two thirds of leaders are optimistic about prospects for 2019 but concerning that far fewer feel upbeat about the market as a whole. We are also seeing a growing divide in confidence levels between pub operators, many of whom enjoyed a good 2018, and the restaurant sector, which endured a tough year.”
Above: The impact of Brexit hangs over those who describe themselves as pessimistic.
He added: “With so much talk of market saturation, indications that leaders are reining in their new openings should be little surprise. On top of that, Brexit is casting a long shadow over ambitions. But difficulties for some operators will always create opportunities for others, and leaders of well-defined and customer-focused brands are going into 2019 with grounds for cautious optimism.”
Jamie Campbell, Chief Commercial Officer at CPL Online said: “This year’s Business Leaders’ Survey paints a fascinating picture of a sector facing a multitude of challenges in a time of rapid change. The soaring popularity of delivery, the roll-out of technology and the consequences of Brexit are just three of the major disruptions that have come to the fore in recent years. 2019 will no doubt be another year of significant evolution for restaurants, pubs and bars.
But amid the upheaval, it is good to see the amount of focus on the people who are so crucial to delivering a great experience to customers. Be it supporting individuals with EU settlement, providing clarity on career progression or having a clear strategy for engagement, businesses that can keep a laser focus on the essentials and equip their frontline teams with the skills and knowledge to deliver an experience will have a crucial head start in an ultra-competitive market this year.”