Propel Morning Briefing

Optimism dips among sector leaders, more than two-thirds increase menu prices as costs soar

Optimism among leaders in the eating and drinking out sectors has been substantially dented since the start of the year, CGA’s latest Business Confidence Survey has revealed.

The survey found only 30% of leaders of restaurant, pub, bar and coffee shop groups are optimistic about general market prospects for the next 12 months – down from 47% in the first quarter of 2017.

Optimism about prospects for their own businesses has followed a similar trajectory, falling from 68% in the first quarter to 52% in this latest survey.

More than two-thirds (69%) of leaders said their business had increased menu prices during the past quarter in light of soaring costs.

The research, based on responses from more than 100 senior executives across the sector, including big corporates and small entrepreneurial operators, also found a third (32%) of leaders admitted their business’ performance had been below expectations in the past six months – down 5% from May’s survey.

The latest Business Confidence Survey found optimism is unlikely to increase in the short term, with more than half (57%) of leaders concerned about consumer confidence during the next six months – although only one in eight (12.2%) are pessimistic about their own business’ prospects for the next year.

The research revealed some more positive trends, including evidence from the CGA BrandTrack survey that consumers eat out just as often as they did four years ago – with frequency among 18 to 44-year-olds at a four-year high.

Meanwhile, 71% of leaders said the decision to leave the EU had a negative impact on their business, with only 3% citing a positive impact.

More than three-quarters of leaders said increasing costs of raw materials (79%) and rates (78%) had negatively affected their business.

The new figures chime with other CGA research that indicates tough trading conditions.

The Coffer Peach Business Tracker revealed like-for-like sales at leading managed pub and restaurant chains had risen by only 1.3% during the past 12 months, while the CGA Prestige Foodservice Price Index demonstrated sustained rises in food costs during 2017. Property and people costs have also increased this year.

CGA vice-president Peter Martin said: “Our Business Confidence Survey is the clearest indication yet of the trials leaders of out-of-home eating and drinking face. With food, property and people costs all rising, consumer confidence softening, competition intensifying and Brexit casting a long shadow over the future, operators are enduring something of a perfect storm of challenges. But this is a creative and resilient sector and while leaders’ optimism has been dented this year, they will be rolling up their sleeves and fighting hard for growth in 2018.”


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