Rising costs hit hospitality leaders’ confidence
The confidence of hospitality’s leaders has tumbled amid fears about operating costs and consumer spending, the latest Business Confidence Survey from NIQ and Zonal reveals.
The exclusive poll shows only 37% of leaders feel optimistic about prospects for their business over the next 12 months. It is a sharp drop from the figure of 51% in February, when operators were feeling upbeat after robust Christmas and New Year trading. The number of leaders feeling optimistic about the future of hospitality in general also fell over the second quarter – by 10 percentage points to 21%.
The research highlights particular fragility in the independent hospitality sector. Just 16% of leaders of single-site operators are optimistic about the prospects for their business in the next year.
The hits to confidence are partly a result of conflict in the Middle East and resulting shocks to fuel prices, which raised fresh fears of inflation in key areas of hospitality. They also reflect British consumers’ weak confidence, which has reached its lowest level since 2023, according to the GfK Consumer Confidence Barometer.
The Business Confidence Survey shows the immediate impacts of slower spending in hospitality. More than a third (36%) of leaders say their revenue in the latest quarter fell year-on-year – the highest number since the start of 2024. Higher costs have meanwhile squeezed margins, with 34% of leaders reporting lower profits.
Inflationary pressures are set to intensify, the Survey indicates. More than four in five (82%) leaders say they are concerned about higher food and drink prices in the next 12 months, while three quarters (75%) are worried about increased employment costs. Taxes are another major burden, with the large majority of leaders concerned about levels of VAT (73%) and rates (67%).
The latest numbers reinforce the urgency of targeted government intervention in hospitality. A cut in VAT, adjustments to National Insurance contributions, more sustainable increases in Minimum and Living Wage levels and changes to the rates system are the top four measures on leaders’ wish lists for government.
Karl Chessell, Director – Hospitality Operators and Food, EMEA at NIQ, said:
“A dip in hospitality leaders’ optimism was inevitable after geopolitical turmoil and domestic economic concerns in the second quarter. The confidence of operators and consumers alike is bumping along the bottom, and relentless pressures on costs are threatening the future of businesses and jobs across the sector.
The case for government help on tax, employment and costs is now more compelling than ever. Support would unlock immediate economic benefits by freeing up businesses to invest in their venues and people, and to revisit prices for their guests. Hospitality is at the heart of the UK’s economy, job creation and local communities, and the arrival of a new Prime Minister is an opportunity to give the sector the support it deserves.”
The Business Confidence Survey from NIQ and Zonal drew responses from leaders at CEO, MD, chair, board and other senior management levels, with combined oversight of more than 15,000 hospitality sites. The research was conducted in May and early June 2026.
