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Thu 5th Oct 2017 - Senior leaders upbeat over prospects despite challenges, 70% pass on food cost rises by increasing prices
Senior leaders upbeat over prospects despite challenges, 70% pass on food cost rises by increasing prices: Two-thirds of senior executives in the eating and drinking out sector remain upbeat over prospects for their business while acknowledging significant challenges in the market, the latest Business Leaders’ Confidence Survey from CGA has revealed. The poll found 66% of respondents are positive about prospects for their company during the next 12 months – the same proportion as in CGA’s last confidence survey in May. In addition, three-quarters (76%) of leaders told the survey their business’ performance so far in 2017 had been in line with or above expectations. However, this contrasts with their optimism over the general trading environment, which has slipped since the start of this year. Asked about their confidence in the out-of-home market as a whole, only one-third (34%) of leaders said they were optimistic about prospects for the next 12 months – down from 43% in May. The survey highlighted widespread concerns over threats to the market, including spiralling input costs and Brexit. Businesses face something of a perfect storm of challenges, the survey confirmed. More than three-quarters (81%) of leaders said their business had been affected by increases in food costs, while 70% said they had passed the increased costs on to consumers via menu price rises in the past quarter. High numbers (78%) of business leaders said they had been hit by increased business rates, increased staff costs (70%), and the impact of terrorism (45%). Falling confidence also reflected uncertainty over Brexit and its subsequent triple impact on consumer confidence, import costs and availability of European workers. Almost three-quarters (71%) of leaders said the decision to leave the EU had already had a negative impact on their business, while there was widespread alarm the most severe consequences of Brexit were still to be felt. The poll flagged up concerns over possible market saturation, as well as the public’s likelihood to continue to go out to eat and drink. Separate research from CGA’s suite of services has shown a 46% increase in managed restaurants in Britain in the past five years but like-for-like sales growth of only 1.3% in the past 12 months. Restaurant openings have been driven by new and fast-growing concepts in particular and the survey showed optimism is much higher among leaders of these fledgling operators than those of established big brands. CGA vice-president Peter Martin said: “Our latest Business Leaders’ Confidence Survey is a fascinating snapshot of a sector that, in general, is determined to ride out the stiff headwinds it faces. Food, property and staff costs are rising, Brexit negotiations are causing havoc with exchange rates, imports and staffing, and consumer confidence remains patchy. Before the EU referendum confidence in the market was sky high. It plummeted straight after the vote and although confidence in leaders’ own businesses and, to a lesser extent, the general market have recovered, they are not back to early 2016 levels. The worrying aspect is the gap between market and company optimism and the effect this uncertainty might have on decision-making, especially around investment and growth. The good news is our findings show two-thirds of business leaders are upbeat about their own prospects, which is a welcome corrective to the doom and gloom, and a reminder of the intrinsic dynamism and ambition of large parts of Britain’s eating and drinking out industry.” The survey is based on a poll of 160 chief executives, managing directors, chairmen and other senior directors and management in the out-of-home eating and drinking sectors, ranging from big company bosses to entrepreneurial startups.


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