Only a third of Britain’s hospitality leaders feel confident about prospects for their business over the next 12 months, a new Business Confidence Survey reveals.
The research has been carried out by CGA by NIQ in partnership with workforce management software provider Sona.
The proportion of leaders feeling confident about the future of hospitality in general is even lower, at 15%. Both figures are up by just 1 percentage point from the last Business Confidence Survey in early 2025, and 19 percentage points below the levels of May 2024.
Optimism has been weakened by rising costs — especially through sharp increases to National Insurance contributions and minimum and living wage levels from April. Four in five (80%) leaders report that wage bills are now significantly higher than they were 12 months ago, and nine in ten (91%) say increased employment costs are a concern for the next 12 months. In addition, significant numbers of leaders are concerned by increases in business rates (73%) and inflation in the cost of food and drink (61%).
Confidence has been damaged further by cautious consumer spending in 2025, after a strong end to 2024. A third (34%) of leaders say their first-quarter revenue fell year-on-year — nearly as many as the 37% recording an increase. This is in line with the CGA RSM Hospitality Business Tracker, which indicated negative or fractional growth in each of the first three months of this year.
The survey highlights further challenges around new legislation. Just over half (55%) of leaders are concerned about compliance with the Employment Rights Bill, and a third (34%) are concerned about costs connected to the Extended Producer Responsibility strategy.
Mounting costs have strained businesses’ margins, and nearly a third (31%) of leaders say their profits have fallen year on year. Just over a fifth either operated at a loss (15%) or broke even (6%) in the first quarter — treble the number of 5% in the last quarter of 2024.
The combination of flat sales and increasing costs is weakening the viability of hospitality operators, the survey shows. Nearly three in five (59%) leaders say they currently have fewer than six months’ worth of cash reserves. One in ten (10%) considers their business is at risk of failure in the next 12 months.
The danger of failure is forcing many employers to cut employment costs. Nearly two-thirds of leaders have reduced the staff count (65%) and / or cut the hours available to their staff. Significant numbers have deferred pay increases (40%) and reduced spending on employee benefits and training (both 29%).
More positive news from the survey includes a quarter-on-quarter increase in the proportion of independent operators feeling optimistic about prospects for their business in the next 12 months, from 12% to 21%. There has also been some relief on energy bills, with well over half (57%) of leaders reporting these have decreased year on year.
• Timothy Taylor’s says it has been forced to raise the price of its beers because of the “hostile fiscal and regulatory environment”.
Cost increases, the rise in National Insurance contributions, and an increase in the national living wage are all affecting the Yorkshire brewer.
The announcement was made as the company reported a turnover of £34.9m for the year to 30th September, 2024, up from £32.8m in the previous 12 months. Pre-tax profit increased from £2.1m to £2.6m.
“The company and broader pub sector continue to be faced with significant input and labour cost increases, as well as the recently announced reduction in business rates relief from 75% to 40% for much of the on-trade,” said Timothy Taylor’s in a statement.
“All of this in the context of a challenged British economy and consumer, and the need for us to recover cost price increases from our customers to offset the reduced profitability from higher employer National Insurance contributions and the 6.7% increase in the national living wage; a necessity if we are to be able to continue to invest in the brewery and our high-quality beer brands.
“The Chancellor’s October 2024 Budget further increased the already heavy cost burden on the hospitality and brewing sectors. When combined with the reductions in business property relief on inheritance tax for shares in family-owned companies, it represents a series of measures which are damaging to Timothy Taylor’s business model.
“The benefits of the marginal reduction in draught beer duty, which were also announced in the Budget, are far outweighed by the cost increases imposed.
“Our strategy is based on long-term patient investment, which benefits all stakeholders, whether employees, tenants, customers, suppliers or shareholders. A hostile fiscal and regulatory environment is not conductive to such investment in the growth of the business.”
