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On-trade groups less pessimistic but overall market confidence plunges

Published:  30 September, 2020

The number of on-trade business leaders feeling confident about the general market has dipped to just 9% — half the level in June (16%), and a fraction of the four-year high of 60% at the start of this year, according to the latest Business Confidence Survey from CGA and Fourth.

The survey, conducted over the first three weeks of September, also showed that restaurant and pub group bosses are less pessimistic than independent operators, with the proportion of multi-site businesses feeling confident about the next 12 months for their own business having climbed five percentage points to 37% since June. 

This contrasts with a recent survey of members of a trio of hospitality trade bodies, including UK Hospitality, which found that only 19% of operators with one or two sites felt optimistic about their prospects. 

However, group leaders’ optimism levels remain way below pre-pandemic levels of 83% in the February edition of the Business Confidence Survey.

The gulf in confidence follows news from CGA’s Market Recovery Monitor with AlixPartners that 89% of group managed licensed premises were back trading by the end of August, compared to just 68% of independently run sites. 

“The last six months have been the most challenging that the out-of-home eating and drinking sector has ever known, and the government’s latest restrictions mean conditions are likely to remain very tough for the rest of 2020,” said Charlie Mitchell, CGA’s research & insight director.  

The Eat Out to Help scheme had been a springboard to recovery for some multi-site groups, and the green shoots of confidence among leaders were “very welcome, but it is clear that many independents face a battle for survival”, he added.

“In the face of so many headwinds, the fresh backing that was announced this week on jobs, loans and VAT is welcome, though whether it goes far enough remains to be seen. This is a resilient and adaptable sector, but it deserves extended support from government if it is to sustain businesses and protect jobs in the coming months.” 

The survey also showed how leaders are responding to market dynamics and consumers’ changing habits, with more than four in five leaders (83%) saying they will be avoiding city centre locations in their growth plans following a collapse in footfall in big cities including London, while three quarters (73%) plan to adapt to the widespread switch to working from home.

Optimism levels are likely to have been further dented by new measures on group sizes, curfews and table service since the survey was conducted.  

Sebastien Sepierre, MD – EMEA, Fourth, said: “The wider Covid-19 narrative across the nation has taken an unfortunate turn in recent weeks, with the government introducing further restrictive measures on our industry. Naturally, this will have a less than positive impact on the confidence of business leaders across the sector.  

“It’s imperative that we work collaboratively to preserve confidence within the safety of eating and drinking out of home, as we navigate the challenging months ahead.”

The Business Confidence Survey is based on responses from 124 leaders working at CEO, MD, chairman, director or other senior management level.