Business Leaders Hopeful For Growth Amid Mounting Challenges
Leaders in the eating and drinking out sector anticipate a tough year of trading in 2018, but remain resilient yet realistic around their future prospects.
That is the headline finding of CGA’s exclusive 2018 Business Leaders’ Survey, produced in partnership with Barclaycard. This annual poll of senior industry leaders pinpoints the opportunities and challenges facing pubs, bars and restaurants over the next 12 months.
The report shows that operators have entered this year on the back of a difficult 2017. For the first time in the history of the survey, more leaders reported that their performance had been below expectations (33%) over the last six months than above expectations (26%). Only a third of leaders (34%) say they are now optimistic about the eating and drinking out market as a whole over the next 12 months.
Causes for concern
The dip in confidence is the result of a cocktail of challenges. CGA’s Survey identifies business rates as the leading cause for concern in 2018, followed by the implementation of the National Living Wage, rising food costs and market saturation. After a string of news stories about casual dining restaurant closures, and with CGA’s Outlet Index measuring 4,000 more restaurants than in 2013, there are mounting concerns that supply is outstripping demand in many areas of Britain.
Difficulties are being intensified by Brexit, the poll shows. Two in three leaders (67%) say their business has been negatively affected by the UK’s vote to leave the EU, and there is alarm that the move may impact staff availability, especially in London.
The combination of challenges is leading many brands to scale back their new openings in 2018, and the majority of leaders (60%) predict fewer new entrants to the market this year than last. Nine in 10 leaders (90%) expect to see more business failures in 2018 than in 2017.
Grounds for optimism
Despite the hostile trading environment, leaders remain upbeat about their own businesses. Nearly two thirds (64%) say they are optimistic for their companies’ prospects over the next 12 months—down only slightly from the figure (68%) at the start of 2017. Only one in 11 (9%) is pessimistic about the year ahead.
CGA’s Business Leaders’ Survey identifies optimism among drinks-led operators in particular. More than two in five leaders (43%) in this sector are optimistic about the general market over the next 12 months, compared to fewer than a third (30%) of food-led firms’ leaders. With evidence of a more sustainable level of supply in drinks-led venues, and the Coffer Peach Business Tracker identifying faster growth for pubs and bars than restaurants in 2017, this part of the market is tipped for a better 2018 than restaurants.
Phil Tate, chief executive of CGA, said: “Our Business Leaders’ Survey paints a complex and fascinating picture of prospects for British pubs, bars and restaurants in 2018. With property, people and food costs rising and the twin threats of saturation and Brexit looming large, brands face something of a perfect storm of challenges this year.
“But this is a very resilient industry, and our poll shows there are bright spots and opportunities for growth in the market too. People will continue to enjoy eating and drinking out in 2018, and operators that can best understand and deliver the experiences that consumers crave will be the winners in an ultra-competitive market.”