Hospitality Leaders’ Confidence Nudges Up, But New Costs Hit Profits And Jobs

The optimism of Britain’s hospitality leaders rose in the second quarter of 2025 despite the arrival of new labour costs, the latest Business Confidence Survey from CGA by NIQ and Sona reveals.

The exclusive poll shows 41% of leaders feel optimistic about prospects for their business over the next 12 months—up by 7 percentage points from the first quarter, and a second successive increase. The proportion of leaders feeling confident about the future of hospitality in general is lower at 18%, but rose by 3 percentage points quarter-on-quarter.

Despite the recent uptick, leaders’ confidence remains at historically low levels. Their optimism for their own businesses is 15 percentage points down on the second quarter of 2024, and 29 percentage points below the levels of August 2021.

Cautious confidence has been fuelled by stable spending in pubs, bars and restaurants in 2025. Just over half (53%) of leaders say revenue increased year-on-year over the second quarter—nearly double the 28% who say it dropped.

However, increases are largely the result of higher menu prices and new openings, and the CGA RSM Hospitality Business Tracker has indicated broadly flat spending on a like-for-like basis in the first half of 2025.

Meanwhile, higher costs—including higher minimum pay levels and National Insurance contributions from April, as well as sustained inflation in food and drink—have hurt the margins of many operators. More than a third (37%) of leaders say their second-quarter profits were down year-on-year, while only 27% say they rose. This has left 9% of leaders with no cash reserves to draw on, while 53% have fewer than six months of reserves.

The new Business Confidence Survey from CGA by NIQ and Sona sets out the full impacts of higher costs on hospitality operators. More than four in five (84%) leaders say extra operating expenses have forced them to raise prices since April, while nearly half (48%) have reduced their staffing levels, 61% have cut hours available to their teams, and 34% have deferred pay increases. Two in five (41%) have cancelled investment plans.

Smaller hospitality businesses have been particularly damaged. Just 22% of leaders of independent companies now feel optimistic about their prospects for the next 12 months—barely half the sector-wide average of 41%.

Rising costs have renewed calls for the government to provide better backing for hospitality. Asked about their priorities for support, leaders identified lower business rates multipliers, a VAT cut and amendments to National Insurance contributions as their top three measures.

Karl Chessell, Director – hospitality operators and food,  at CGA by NIQ, said:
“Hospitality is a remarkably resilient sector, and these figures suggest leaders have responded nimbly to the many challenges they have faced in 2025. However, fast-rising costs are clearly taking a toll on many businesses’ margins. There’s a dangerous ripple effect too, as leaders are being forced to take difficult decisions on employment and investment, while inevitable increases in menu prices are damaging consumer confidence. Well-run, distinctive and guest-focused hospitality operators can look forward with optimism, but without urgent government intervention the sector will struggle to generate the economic growth we know it is capable of.”

Paul Watson, VP of hospitality at Sona, said:
“Operators are continuing to face significant challenges, with margins being squeezed so tight that deploying more team members to deliver extra revenue can sometimes feel counterintuitive. But without the correct team in place to protect peak trading times, revenue opportunities can walk back out the door, so finding the balance is crucial. Guests have become more picky about where they spend their money, so having a happy, stable and experienced team is absolutely vital to deliver exceptional guest experiences that will keep trade coming back again and again. Having people, tools and processes in place that nurture this balance will be key in the next few months.”