Rising costs threaten hospitality’s renewed momentum
Hospitality’s confidence has increased amid an uptick in consumer spending, but a supportive Budget is needed to translate short-term gains into long-term recovery, the latest Business Confidence Survey from NIQ and Zonal reveals.
The poll shows just over half (53%) of leaders in the sector feel optimistic about prospects for their business over the next 12 months. This is a sharp rise from the figure of 37% at the end of the second quarter and marks the tracker’s highest point since early 2024. The number of leaders feeling optimistic about the future of hospitality in general has also increased over the third quarter – by 7 percentage points to 28%.
However, confidence levels remain fragile and starkly divided across the market, with widespread concerns about inflationary issues for businesses and consumers. The survey shows smaller businesses are especially cautious, and just 11% of leaders of independent leaders are optimistic about prospects for their business in the next year – the lowest point since the COVID-19 pandemic.
Profitability in recovery
Hospitality’s optimism has moved up after a solid Summer and early Autumn, with the men’s football World Cup and good weather boosting footfall. The Business Confidence Survey from NIQ and Zonal shows 84% of businesses increased or maintained their revenue year-on-year in the third quarter – the highest figure for more than two years.
This trend is echoed by the NIQ RSM Hospitality Business Tracker, which has recorded five straight months of like-for-like sales growth at Britain’s managed groups. Meanwhile, 57% of leaders told the Business Confidence Survey that profits were better than, or in line with, last year’s performance. Only 5% say their business is loss-making or unviable.
Bills rising again
While profitability is improving, margins in hospitality are being squeezed by sustained pressure on costs. There are specific concerns about rising energy bills, with two in three (68%) leaders reporting increases to their gas and electricity prices in the last three months. More than four in five (84%) leaders are also concerned about inflation in food and drink.
The Business Confidence Survey suggests inflation is damaging long-term confidence as well as short-term plans. Well over half (58%) of leaders say interest rates are a concern for their business over the next 12 months and a third (34%) are concerned about investor confidence. Four in five (80%) think the UK business environment is not currently welcoming to new investment, and nearly as many (76%) think the tax burden is a major barrier to investment.
Budget help needed on tax, rates and pay
As the Budget nears on Wednesday 28th October, the research from NIQ and Zonal sets out leaders’ priorities for government support. A VAT reduction for hospitality is the most-sought form of relief, following the cross-sector ‘VAT’s the Problem’ campaign. Cuts to National Insurance contributions, and extended support on rates are also high on the agenda.
Help in these areas could soon unlock investment, the Business Confidence Survey finds. More than half of leaders say cuts to VAT and National Insurance contributions would increase their resilience and allow them to spend more on premises and create jobs, especially for young people.
Karl Chessell, Director – Hospitality Operators and Food, EMEA at NIQ, said:
“After a very tough start to 2026, the third quarter brought a welcome improvement in the confidence of leaders and consumers alike. With sales and profits moving in the right direction, businesses will now be cautiously optimistic about trading in the crucial run-in to Christmas and New Year.
However, there is no room for complacency. Business confidence and sales growth both remain well below pre-COVID levels, while relentless inflation in key costs means margins are precarious – especially at smaller businesses. This makes the imminent Budget the most consequential in many years. With the right support on VAT, rates and labour costs, this can be the start of a new period of investment and job creation in hospitality.”
Tim Chapman, Chief Commercial Office at Zonal, said:
“It is encouraging to see confidence return to the sector following a strong third quarter, with many operators benefiting from increased footfall and improved trading conditions. Hospitality businesses have shown remarkable resilience over the past year, and the recent uplift in sales and profitability demonstrates the vital role the sector continues to play in the wider economy.
While revenue is moving in the right direction, there is still a degree of caution across the market, particularly among smaller operators who continue to face significant pressures. The impending Budget will be crucial in sustaining positive momentum and allowing operators to continue to invest in their people, venues and guest experiences.”
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 August and September 2026.
About Zonal
Zonal is the UK’s leading hospitality technology provider, trusted by the country’s largest pub, restaurant and hotel operators. With 45 years of UK hospitality expertise, a fully connected technology ecosystem and always-on, human-led support, Zonal gives complex, multi-site operators the clarity, control and confidence to run every site at its best.
For more information about Zonal, please visit zonal.co.uk
About NIQ
NielsenIQ (NYSE: NIQ) is a leading consumer intelligence company, delivering the most complete and trusted understanding of consumer buying behavior and revealing new pathways to growth. By combining an unmatched global data footprint and granular consumer and retail measurement with decades of AI modeling expertise, NIQ builds decision systems that help companies turn complex data into confident action.
With operations in more than 90 countries, NIQ covers approximately 82% of the world’s population and more than $7.4 trillion in global consumer spend. Through cloud-based platforms, advanced analytics and AI-driven insights, NIQ delivers The Full View™—helping brands and retailers understand what consumers buy, why they buy it, and what to do next.
For more information, please visit www.niq.com.
Forward Looking Statement
This press release regarding sales trends for Britain’s eating and drinking out market may contain forward-looking statements regarding anticipated consumer behaviors, market trends, and industry developments. These statements reflect current expectations and projections based on available data, historical patterns, and various assumptions. Words such as “expects,” “anticipates,” “likely,” “may,” “poised to,”,” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future outcomes and are subject to inherent uncertainties, including changes in consumer preferences, economic conditions, technological advancements, and competitive dynamics. Actual results may differ materially from those expressed or implied in these statements. While we strive to base our insights on reliable data and sound methodologies, we undertake no obligation to update any forward-looking statements to reflect future events or circumstances, except to the extent required by applicable law.
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