‘It’s an asymmetric market’

Some headline numbers don’t make for happy reading. The Hospitality Market Monitor from CGA by NIQ shows a 31% fall in Britain’s licensed premises in 20 years, and 3,766 net closures in the last 12 months alone. But beneath this sit two very different trends: sustained closures of independent venues and only a small decline for modest groups. Thousands of small businesses have been pushed to the wall by COVID and soaring costs, but bigger operators have had the scale and reserves to get through. “It really is an asymmetric and unequal market with a big polarization between winners and losers,” Peter Martin said. “The gap is broadening and that's going to have some important ramifications for the structure of the sector.”

‘People hate being miserable—they want to go out’

There’s no doubt that soaring household bills have sapped consumers’ spending this year. However, the underlying demand for pubs, bars and restaurants is still good. CGA’s Consumer Pulse survey shows 40% of people would prioritise hospitality if their disposable income fell—more than the numbers who would prioritise things like clothing (33%), home improvements (28%) or international holidays (25%). “Fundamentally, people hate being miserable—they want to go out.”

‘We’re seeing steady growth back’

Solid demand is reflected in the CGA RSM Hospitality Business Tracker, which has recorded 13 straight months of like-for-like sales growth for managed groups. Optimism is rising too. The Business Confidence Survey from CGA and Fourth shows 89% of groups are now operating at a profit or breaking even, and only 5% of leaders say their business is at risk of failing. Nearly two thirds (62%) are confident about prospects for their business in the next 12 months. “We may not be back at pre-pandemic sales levels. But we are seeing steady growth back as people continue to go out,” said Peter Martin.

‘It’s not just a cost of living crisis—it’s a cost of doing business crisis’

Soaring costs may be putting pressure on consumers’ spending, but their impact on businesses is even more significant. “It’s not just a cost of living crisis. We’re definitely seeing that in the market, but it’s not the biggest issue: we still have a cost of doing business crisis as well. The cost base is rising considerably—it’s the people who are able to cope with the new cost base that are going to succeed.”

‘Investment’s starting to come through’

After retrenchment during COVID, many hospitality groups are on the front foot again. Nearly all (98%) leaders told the Business Confidence Survey that they plan to invest in their business over the next three years, and among those whose profits are increasing, well over half plan to open new sites (59%) in the next 12 months. But again, there’s a gulf in confidence between upbeat managed groups and fragile independents. “A lot of investment is starting to come through from groups… it's going to get tougher and tougher for those who aren’t investing to compete with those who are.”

‘We need new skills to win’

In a challenging and fast-moving market, the skills that served businesses well until COVID aren’t enough anymore. “We're going to need new skills to win,” said Peter Martin. One of the top priorities is sharp consumer insights and reaching the 21% of consumers who plan to spend more money in the sector over the next 12 months. “You need to concentrate on the people with the money. It’s the tyranny of averages: if you’re just looking at the top line numbers you can get into trouble… It’s so important to get really good data.” It’s vital to understand subtle but significant shifts in people’s behaviour, like the tendency to go out earlier and the reduction in Friday night visits.

‘Investing in tech gives you an advantage’

New skills are also needed in technology. The Busines Confidence Survey shows 83% of leaders will invest in it in the next three years, in areas like staff rotas, payroll and inventory management. “Those who invest in technology are going to get a real advantage in the market,” Peter Martin said at the Leaders Summit.

‘Consumers are really interested in sustainability’

Tech can help make businesses more sustainable too. That’s an important consideration at a time when consumers, staff and investors are piling pressure on businesses to reduce their environmental impacts. ‘Sustainability Matters’ research from Peach 20/20, Nutritics and CGA reveals sustainability is a factor in venue choice for 44% of consumers now, and young team members in particular want their employers to be greener. “Some people think their customers aren’t really interested in sustainability—but they really are.”

Peach 20/20 thanks its headline partners on the Leaders Summit: CGA by NIQ, Diageo, Fourth, Nutritics, Wireless Social and Zonal. Premium partners were Chapman Ventilation, Coca-Cola Europacific Partners, Harri and Uber Eats. Event partners were Airship, Brakes, Cardlytics, Freeths, Fresh Direct, Greene King, Lucky Saint and Toggle.