A spike in costs for both businesses and consumers shook confidence in the restaurant, pub, and bar industry during the second quarter of 2022.
Only 23% of leaders appear to be optimistic about the next 12 months, compared to 65% in March, according to research by CGA and Fourth.
Some 53% of leaders expressed confidence about their own businesses, even though it has fallen by 15 percentage points since the last survey.
Compared to the less financially stable independents, this may reflect a greater optimism among multi-site leaders who comprised the survey cohort.
Most of these larger businesses remain profitable for now, according to the survey, with 88% of leaders saying their company is profitable, and half (53%) saying profitability is the same or higher than before Covid-19.
Cost inflation, however, is expected to compromise consumers' spending with business leaders predicting 6% drop in sales and 12% drop in profit margins in the next 12 months.
The survey also highlights the ongoing labour shortages in the hospitality industry.
Currently, 11% of leaders' roles are vacant, an increase of two percentage points since the first quarter of 2022, while pay levels have risen by an average of 10% in the past 12 months due to competition for staff, the survey notes.
"After a solid first half of 2022, this survey shows the squeeze on hospitality businesses is tightening. The full impact of the cost-of-living crisis remains to be seen, but leaders are aware that it is likely to reduce guests’ visits over the rest of the year," said Karl Chessell, CGA’s director- hospitality operators and food, EMEA, in a statement.
"While many hospitality venues currently remain profitable and popular, businesses that have been left fragile after Covid-19 lockdowns will now be seriously concerned by the impact of rising costs over the coming year."
"Confidence is dropping among business leaders, whose operations are swamped with pressures from all angles, not least rising costs and labour shortages," added Sebastien Sepierre, managing director–EMEA, Fourth.