The exclusive survey of corporate leaders and entrepreneurs across the UK’s out-of-home food and drink market was conducted last August by business insight consultancy CGA in partnership with hospitality software partner Fourth.
The Survey also reveals that a majority of those leaders surveyed back a ‘soft Brexit’ outcome.
It shows that a soft Brexit is the favoured option for 62% of bosses. No other outcome, whether ‘no deal’, ‘Chequers’ or ‘hard Brexit”, gains over 10% support. In addition 69% said they believed there should be a second referendum.
Just over a third (36%) of the leaders of Britain’s pub, bar and restaurant groups are optimistic about prospects for the market over the next 12 months – a drop of 11 percentage points since the last poll of leaders last May.
While two-thirds (67%) remain upbeat about their own business performance this has dropped from 75% over the last quarter. In all, the survey finds 71% saying that the decision to leave the EU had already had a negative effect on business.
Among nearly three-quarters of leaders who say the Brexit vote has already had a negative effect, most cite an increase in the cost of ingredients and the decreased availability of staff. Nine in 10 (92%) say the reduced access to kitchen staff has had, or will have, an impact on their business.
“The restricted availability of staff is immediate and critical,” said one respondent to the survey.
Leaders identify Brexit-related damage to consumer confidence too, with half (48%) forecasting that people’s frequency of eating and drinking out will decrease over the next six months. Only one in 10 (9%) expect it to increase.
“Brexit uncertainty is massively damaging corporate spend and household confidence,” commented one respondent.
Preparing for Brexit
The survey reveals some of the steps operators have taken to prepare for Brexit. Three quarters (73%) have anticipated its impacts by investing in staff training and retention while one quarter (27%) have invested in local food and drink suppliers. But nearly a third of leaders (31%) still consider their business to be under-prepared for Brexit or not prepared at all.
Amid the challenges, the research reveals some grounds for cautious optimism in the sector. More than a quarter of leaders (29%) say their business’s performance had been ahead of expectations thanks in part to the twin boosts to pubs and bars of the hot weather and the World Cup. Some bosses also see possible long-term benefits of Brexit, especially if it cuts red tape and reduces non-EU tariffs.
“Our Business Leaders’ Survey is the clearest indicator yet of the dramatic impact of Brexit on the hospitality sector,” said CGA Chief Executive Phil Tate, “It reveals the huge disruption that the EU Referendum has already caused to the costs and confidence of businesses and the further impacts it’s likely to have on staff recruitment and retention, especially in London. Our research suggests that the large majority of operators are now pinning their hopes on a ‘soft’ Brexit or even a second Referendum. He added, “The Business Confidence Survey confirms that Brexit is going to bring enormous challenges for the sector into 2019 and beyond.”
Ben Hood, Chief Executive of Fourth, added, “It’s clear to see that sustained Brexit uncertainty has impacted confidence among industry leaders. With rising costs – including those associated with employment – a shrinking talent pool and the sector’s heavy reliance on EU workers, the government needs to navigate the complex process of leaving the EU with an approach that supports hospitality employers.
“Beyond the negotiations and despite the uncertainty, what we see is an industry rolling up its sleeves to negotiate the challenges ahead: it’s clear that employers are stepping up their investment in technology that supports upweighted training and development as well as employee culture and engagement,” he continued, “These are the things that matter when it comes to attracting and retaining the best talent and ultimately, as we know, are critical in delivering the right guest experience.”
The CGA Fourth Business Confidence Survey is based on responses from more than 130 leading figures from the industry, working at Chief Executive, Managing Director, Chairman, Board and senior management levels.