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Only two in five hospitality business leaders say they’re trading at profit, though confidence is on the rise

Published:  24 May, 2021

Only two in five hospitality businesses are now either trading or are expected to trade at a profit by the end of June, a new survey from CGA and Fourth has revealed.

Data from the duo’s Business Confidence survey shows the “strong return” of the on-trade since trading outside was permitted on 12 April. This includes a sharp rise in business confidence among hospitality leaders, with optimism for the next 12 months reaching a six-year high.

However, the data has also revealed that two in five (41%) of businesses are still trading at a loss as social distancing restrictions and staff shortages continue to take their toll.

Karl Chessell, CGA’s director for hospitality operators and food, EMEA, said: “After the immense challenges of 2020 and early 2021, it is very encouraging to see confidence levels riding so high across the managed sector.”

While paying tribute to the “resilience of operators”, he added that there is “no escaping the fact that Covid-19 has taken a massive toll on hospitality” with the sector still in need of “sustained support on challenges like rent, rates and recruitment”.

The survey, from on-trade analysts CGA and management solutions specialists Fourth, shows that four in five (79%) business leaders in the managed restaurant, pub and bar sector are optimistic about prospects for the eating and drinking out sector over the next 12 months. This is a sharp rise since last October, when only 18% were optimistic.

In fact, the 79% figure is the highest the sector has seen for more than six years – a remarkable bounce-back considering the pressures of the past year.

The Business Confidence Survey also indicates a solid start to trading since outside service was permitted from mid-April, with 58% of leaders rating their performance since then as ahead of their expectations, and just 8% below.

Sebastien Sepierre, managing director for EMEA at Fourth, called for more support to turn confidence and enthusiasm into profit for businesses.

He said: “It’s incredibly encouraging to see optimism levels increase amongst business leaders. This positivity is tempered somewhat by the challenging labour market, with many operators struggling to recruit in the current climate as the demand for workers accelerates with the easing of restrictions.

“As the industry slowly returns to full capacity, the recruitment challenge will be further exacerbated, so it’s never been more important for businesses to look at driving efficiencies and productivity in their management of labour.”