The UK’s hospitality businesses are being forced to make increasingly difficult decisions regarding investment, according to the latest Business Confidence Survey from CGA by NIQ and Sona, with rising taxes and employment costs eating into capex budgets.
The latest Business Confidence Survey from CGA by NIQ and Sona has revealed that 63 percent of UK hospitality businesses have seen operational expenditure increase over the last year, yet just 34 percent have increased capital expenditure.
Inflationary pressures, higher taxes and employment costs have hit the majority of operators, with 45 percent forced to cancel planned investment, and 53 percent reporting that current cash reserves will last no longer than six months
For the government’s growth strategy, this is not the news it wanted to hear.
“Soaring costs have been particularly damaging for smaller operators,” reported CGA. “Just 22 percent of independents have increased their capital expenditure year-on-year, while 60 percent have been forced to cut it – 15 percentage points more than the sector average.”
“Intense cost pressures are forcing businesses to make difficult decisions on investment, but leaders recognise the value of capex in sustaining sales and keeping pace with competitors. Two thirds (65 percent) of leaders say site refurbishments are a high or medium priority for investment, while 55 percent say the same about workforce management technology.”
Half of respondents also identified both customer-facing technology and site acquisitions as high or medium priorities.
“April’s increases in pay levels and National Insurance contributions have added yet more weight to the heavy cost burdens on hospitality businesses,” said Karl Chessell, director of hospitality operators and food, EMEA at CGA by NIQ.
“They have further polarised the sector, between successful and efficient businesses that are able to invest across the board, and weaker ones that are struggling to keep up with day-to-day costs and are scaling back capital projects.”
According to the survey, 25 percent of hospitality leaders are currently able to increase both their operational and capital expenditure, but 14 percent have been forced to reduce both.
But as often is the case, these confidence surveys do tend to bring the psychotic, schizo tendencies to the fore. Amid all the fears of rising costs and inflationary pressures, it’s almost in spite of the difficult climate that confidence among hospitality leaders rose during the second quarter of 2025. Some 41 percent were feeling optimistic about the next 12 months, an increase of 7 percentage points on the first quarter.
So three cheers for the 41, you go for it guys. But, the overall sentiment amongst the remainder was still below par.
“The proportion of leaders feeling confident about the future of hospitality in general is lower at 18 percent, albeit it has risen by 3 percentage points quarter-on-quarter.”
The government wonks will clearly be grateful for small mercies from small surveys – this at least puts an upward curve on the business confidence graph. Unfortunately for the industry, that curve is still far too close to the baseline which many fear is edging its way right up to their business survival level.
Investment slips
CGA Survey said… “Soaring costs have been particularly damaging for smaller operators. Just 22 percent of independents have increased their capital expenditure year-on-year, while 60 percent have been forced to cut it – 15 percentage points more than the sector average…
