Leaders Call For Support as Rising Costs and Falling Visits Hammer Confidence

Hospitality leaders’ optimism remains low despite a boost from the football World Cup and hot weather, the latest Business Confidence Survey from NIQ and Zonal reveals.

The poll shows just 35% of leaders feel optimistic about prospects for their business over the next 12 months. It is a drop of 2 percentage points from the last survey in May, and 16 percentage points down from the start of 2026. The number of leaders feeling optimistic about the future of hospitality in general is virtually flat quarter-on-quarter at 21%.

Footfall, sales and profits squeezed

While football fans packed pubs during England’s long run at the World Cup, the tournament was much less beneficial to restaurants and other venues not screening games. Around two in five (41%) leaders say their footfall has declined recently – more than the number (34%) who say it has increased. Excessive heat may also have cut some consumers’ trips to eat and drink out.

Fewer visits and cautious consumer spending have increased the pressure on venues’ sales and profits, the Business Confidence Survey shows. Only 41% of leaders reported that their quarterly revenue had increased year-on-year, despite higher prices in most venues. Just over half (52%) said either that their profitability had dropped, or that their business was currently running at a loss or unviable.

Relief needed on taxes and inflation

Fragile confidence levels highlight the urgent need for greater support for hospitality. Leaders have welcomed the government’s relief on business rates for pubs, clubs and music venues, and are hopeful that more help will follow from new Prime Minister Andy Burnham. Nearly half (47%) of leaders surveyed by NIQ and Zonal said they were optimistic that the new leadership will benefit hospitality, while 26% are pessimistic.

However, much more support is needed across a range of areas including taxes and high inflation in labour, energy and food costs, the survey shows. Leaders said their employment costs have risen by an average of 10.7% per person in just two years, and 85% say higher labour costs are a concern for their business. The same proportion (85%) have seen their electricity, gas and / or oil prices increase in the last three months, following energy shocks related to constricted oil supply.

Meanwhile, more than two thirds (69%) are concerned by inflation in food and drink prices, which are likely to rise further this year amid uncertainty about geopolitics and the impact of heatwaves on production. Nearly as many (67%) are concerned about VAT, and high energy prices and interest rates are among many other worries.

The Business Confidence Survey indicates that challenges are especially acute in the independent hospitality sector at the moment. Just 16% of leaders of single-site operators are optimistic about the prospects for their business in the next year.

Karl Chessell, Director – Hospitality Operators and Food, EMEA at NIQ, said:
“The World Cup and hot weather should have boosted hospitality this Summer, but any benefits have been outweighed by relentless challenges. Falling visits and rising costs are a hugely damaging combination and it is no surprise to see that leaders’ confidence is running so low – especially among smaller businesses. With conflicts and the climate fuelling market volatility, there is little respite in sight on inflation.

More positively, there are encouraging signs of support from the new Prime Minister, and the forthcoming Budget could be a lifeline for thousands of hospitality businesses and jobs. From VAT to rates to National Insurance contributions to alcohol duty, there are many levers that the government can immediately pull to ease the pressure on operators. Doing so would quickly unlock investment and new jobs and help kickstart the economic growth that the country needs.”

Tim Chapman, Chief Commercial Officer at Zonal, said:
“What is most striking about this research is that, despite the challenging operating environment, just how much operators are continuing to invest where they can – in their estates, in their teams, in technology, and in the experiences that keep guests coming back.

That being said, there’s no hiding from the fact that confidence in the sector is flat at best. Recent Government moves, however, such as business rates relief, are creating some optimism as we look to rest of 2026 and beyond.

Hopes appear to be further boosted by the possibility of a VAT cut for the sector in this autumn’s budget – something which the sector has fought long and hard for and which is very well supported by both operators and consumers alike.”