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Morning Briefing for pub, restaurant and food wervice operators

Thu 28th Feb 2019 - Confidence levels fragmented as leaders scale back expansion plans
Confidence levels fragmented as leaders scale back expansion plans: Confidence levels in the eating and drinking out industry are in the balance in early 2019 amid ongoing challenges and anxiety about Brexit, CGA’s 2019 Business Leaders’ Survey has revealed. The exclusive poll, conducted in partnership with CPL Online, found more than two-thirds (68%) of leaders are optimistic about prospects for their business during the next 12 months – five percentage points more than in November. However, the number of leaders feeling optimistic about prospects for the market in general is significantly lower, at 39%, flat on November. Patchy confidence levels are prompting leaders to scale back their expansion plans, the survey found. Almost one-quarter (24%) of leaders plan to open more than five sites this year – barely half the 45% who intended to do so at the time of CGA’s 2016 survey. The survey identifies a notable contrast in confidence between the pub and restaurant sides of the sector. More than half (53%) of leaders of drink-led operators said they feel optimistic about the general market in 2019, compared with only one-third (33%) of food-led business bosses. Two-fifths (40%) of all leaders said their business had traded ahead of expectations in the past six months – 14 percentage points higher than last year’s survey. But with CGA’s Coffer Peach Business Tracker indicating like-for-like sales growth of just 0.8% for managed pub and restaurant groups in 2018, this might be more a reflection of leaders’ relatively low expectations for 2019 than of strong trading. The survey revealed a complex set of dynamics at play in the market in early 2019, with several reasons for caution among business leaders. Brexit is causing significant uncertainty and, with the availability of back-of-house staff a key concern, the UK’s departure from the EU is likely to add to this particular anxiety. Meanwhile, delivery is viewed as a double-edged sword with benefits of incremental sales but concerns over its negative effect on brand perception. Healthy eating, sustainability, technology and importance of the all-round experience are among the other big trends the survey indicates will be at the top of leaders’ in-trays in early 2019. But as well as emphasising the need to understand these trends, the survey stressed the importance of consistently delivering on hospitality fundamentals, including service and food and drink quality. Phil Tate, group chief executive of CGA, said: “Our survey reveals an industry caught between instinctive confidence for growth and caution about the challenges they face. It is encouraging to find more than two-thirds of leaders are optimistic about prospects for 2019 but concerning far fewer feel upbeat about the market as a whole. We are also seeing a growing divide in confidence levels between pub operators, many of whom enjoyed a good 2018, and the restaurant sector, which endured a tough year. With so much talk of market saturation, indications that leaders are reining in their openings should be of little surprise. On top of that, Brexit is casting a long shadow over ambitions but difficulties for some operators will always create opportunities for others, and leaders of well-defined and customer-focused brands are going into 2019 with grounds for cautious optimism.”

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