Confidence is slowly returning to the eating and drinking-out market in the wake of the Brexit vote – although levels of optimism are still well below those at the start of 2016, latest research by CGA among business leaders shows.
A survey of more than 200 senior executives in restaurant, pub, bar and café groups carried out across the country in November reveals that half (50%) are optimistic about prospects for the market in the next six months. Of those, a handful (5%) are very optimistic. Almost a quarter of executives (23%) remain pessimistic.
However, levels of optimism fall to just 36% when those same operators are asked about their confidence in the market over the next year, reflecting longer term concerns and the continuing uncertainty in both the sector and the wider country about the Government’s Brexit plans and their effect on the economy.
Of those surveyed, around a third (31%) say they are pessimistic about the market in the coming 12 months.
The latest results are a big improvement on the mere 15% that remained upbeat straight after the EU referendum, but still below the 75% confident about market prospects at the start of the year or the 93% optimistic at the beginning of 2015.
Although, Brexit remains the biggest worry, confidence has also been hit by concerns about business rates increases – and this is particularly felt among restaurant chains that are more dependent on leased sites in urban areas. Of all leaders who mentioned increased costs as a concern, 61% stated business rates as a threat, unprompted.
While the current relatively benign state of trading, with the Coffer Peach Tracker showing mainly steady if low level monthly like-for-like sales increases, has helped to steady nerves in the short term, rising costs driven in part by the falling pound has reinforced longer term worries.
In all, 98% of executives said increasing costs of raw materials and ingredient would have a significant or very significant effect on business, with 72% saying ‘very significant’.
As far as trading goes, the consensus among business leaders is that average consumer spend per visit will hold up although visit frequency is more likely to be cut back.
The better news is that operators are much more confident about prospects for their own businesses than for the market as a whole, with 59% optimistic about their own operations’ prospects both over the next six months and the coming year. Pessimism levels drop below 16%.