Managed hospitality groups bullish as independent confidence sinks to 16%

Employment costs are a key concern this year.

A deepening divide in the UK hospitality sector has seen confidence amongst managed groups surge following a robust festive period, whilst independent operators face a staggering gap with just 16% feeling secure about their survival over the next 12 months, a report by CGA by NIQ revealed.

A poll reveals  51% of leaders feel confident about prospects for their business over the next 12 months. This is a strong recovery from a five-year low of 26% in October 2025, and reflects solid December trading as well as greater economic certainty.

However, only a quarter of single-site operators increased revenue in 2025. By contrast, 61% of leaders of businesses with 5+ sites say their revenue increased year-on-year. These leaders are increasingly ambitious on expansion, with nearly two-thirds (63%) planning to increase site numbers in the next 12 months.

According to the Business Confidence Survey from NIQ and Zonal, two-thirds (66%) say their business’s fourth-quarter revenue had increased YoY, 20 percentage points more than in the third quarter. Meanwhile, only 18% recorded a decline. More than two-fifths (43%) achieved higher profits, and 30% saw them fall.

Improved profitability suggests hospitality businesses are coming to terms with sharp increases in their costs that were imposed in 2025. However, many leaders remain worried about the impact of further inflation. 

Nearly nine in 10 (88%) say increased employment costs are a concern for 2026, and nearly three-quarters are concerned about food and drink inflation (73%) and business rates (71%). Other taxes, energy prices and property costs are among many more causes of concern for leaders in early 2026.

Meanwhile, the proportion of leaders planning to spend on site refurbishments has sharply increased after widespread cutbacks in 2025, and more money is being found for operational efficiencies, menu development and employee engagement. Technology is another top priority for leaders, with AI tools, loyalty platforms and CRM software the three most common targets for investment.

Whilst leaders are investing in key areas, they have also been forced to make difficult decisions on menu prices and staffing. Rising employment costs have led many businesses to cut team numbers or reduce hours, and exactly half (50%) of leaders agree that being short-staffed has become ‘the new normal’. 

However, survey respondents are conscious that reducing costs risks compromising guest experiences and sales.