Confidence rises but business rates must be addressed
The optimism of Britain’s on-trade leaders has risen for the fourth quarter in a row but they remain concerned about inflation in key inputs, and the challenge of business rates, which they hope will be addressed in today’s (Wednesday 22 November) Autumn Statement.
The data shows 49% of leaders now feel confident about the hospitality market over the next 12 months, which is a four percentage-point boost from August’s figure of 45%, according to the October edition of the Business Confidence Survey from CGA by NIQ and Fourth.
The proportion of leaders who feel optimistic about prospects for their business in the next year is unchanged at 62%.
The survey indicates important improvements at businesses that have been left fragile by the pandemic and the costs crisis. Only 5% of leaders say their business is currently at risk of failure – down from 11% last quarter. The number feeling pessimistic about the market has dropped from 31% in August to 18% in October.
Upbeat for Q4
However, leaders are upbeat about prospects for the crucial final quarter of the year. Almost six in 10 (58%) are optimistic about their businesses’ Christmas trading, with just 8% feeling pessimistic.
Well over a quarter (29%) of leaders say Christmas bookings are ahead of this time last year – twice the number (15%) who say reservations are down.
Business rates are the most pressing issue at the moment, with 57% of leaders very concerned about them ahead of possible changes in the Chancellor’s Autumn Statement.
There is widespread support for rate reform and relief, with 67% of leaders saying their business would be less stable if relief were removed. Significant numbers say a withdrawal of relief would force them to cut investment (71%), reduce staffing levels (61%), raise menu prices (61%) or close sites (45%).
Concern over NLW
Well over a third (38%) of leaders are also very concerned by increases in the national living wage. Employers have increased pay levels by an average of 10% in the last 12 months—though better rates have helped to bring down staff vacancies, which now stand at 8%, down from 11% in the previous survey. Among other cost pressures, roughly a third of leaders say they are very concerned about energy prices (35%) and food and drink inflation (30%).
Karl Chessell, CGA by NIQ’s director - hospitality operators and food, EMEA, said: “These figures are another vote of confidence in hospitality and a sign that trading conditions may start to ease as inflation comes down.
“It’s encouraging to see good levels of optimism about Christmas sales, which can make or break the year for many restaurant, pub and bar groups. Despite pressure on their spending, consumers clearly remain eager to enjoy the special experiences that hospitality provides.
“There is real concern about the damage a rise in business rates would cause. Hospitality is a vibrant industry that makes an enormous contribution to the UK economy but any changes to rates relief and caps would jeopardise its investment and job creation and further fuel inflation.”
