Confidence among hospitality leaders continues to falter, with rising costs and cautious consumer spending weighing heavily on the sector, according to two major new data sets from CGA by NIQ, Sona and the Office for National Statistics (ONS).
Just 34% of leaders feel confident about prospects for their business over the next 12 months, with only 15% optimistic about the sector overall. While both figures mark a marginal increase on earlier this year, they remain 19 percentage points lower than in May 2024—highlighting the continuing pressures on operators.
Wage hikes, driven by increased National Insurance contributions and changes to the Minimum and Living Wage in April, are a central concern. Four in five (80%) leaders say their wage bills are significantly higher than a year ago, with 91% citing employment costs as a key challenge. Business rates (73%) and food and drink inflation (61%) also rank high among cost pressures.
New figures from the ONS further confirm the impact of rising costs, with its latest Labour Market Overview reporting a fall of 109,000 payrolled employees in May – surpassing job loss predictions from both the Office for Budget Responsibility and Deutsche Bank, which had estimated 50,000 and 100,000 respectively following the April NICs hike.
Kate Nicholls, Chief Executive of UKHospitality, said, “Losing more than 100,000 jobs across the economy in a month goes far beyond the worst-case scenario predicted by the Government’s own fiscal watchdog, major banks, and countless business groups. We were clear at the time that the changes to NICs were a tax on jobs, and so it is sadly proving.”
The latest Business Confidence Survey from CGA by NIQ and Sona reinforces these pressures, revealing that nearly two-thirds (65%) of hospitality leaders have reduced staff numbers and/or hours in recent months. Pay increases have been deferred by 40%, with cuts also reported in staff benefits and training.
Confidence in the sector remains fragile. The survey shows that 59% of leaders have fewer than six months’ cash reserves, while 10% believe their business is at risk of failure within the next year. Profit margins continue to narrow—31% report year-on-year declines, and over one in five either broke even (6%) or operated at a loss (15%) in the first quarter.
There are signs of cautious optimism among independents, with confidence in that group rising from 12% to 21% quarter-on-quarter. More than half (57%) of leaders also reported a decrease in energy costs over the past year.
Karl Chessell, Director – Hospitality Operators and Food, EMEA at CGA by NIQ, said, “The double whammy of higher costs and softer trading have hit hospitality businesses hard, and it’s no surprise that confidence is running low. These costs are choking hospitality businesses and compromising the investment and employment that are so important to the UK economy.”