Hospitality leaders’ confidence steadies but costs weaken small businesses

Hospitality leaders remain cautious about the future despite a steady level of optimism in early 2026, according to the latest Business Confidence Survey from NIQ, powered by CGA intelligence, and Zonal.

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

The number of leaders feeling optimistic about the future of hospitality in general also bounced back, from 13% in late 2025 to 31% in the latest poll. Both confidence metrics are now at their highest points since mid-2024, but they remain well below pre-COVID levels.

Sales and profits rise after festive flurry

The Business Confidence Survey from NIQ and Zonal shows how leaders have been boosted by the strong end to 2025 for both sales and profits. Two thirds (66%) say their business' fourth-quarter revenue had increased year-on-year-20 percentage points more than in the third-quarter-while only 18% recorded a decline. More than two fifths (43%) achieved higher profits and 30% saw them fall.

Cost challenges hold down confidence

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

Contrasting fortunes for small and large businesses

The survey highlights a growing divide in confidence between smaller and larger hospitality businesses. Just 16% of independent leaders say they feel confident about their business' prospects, and only a quarter (24%) of single-site operators increased their 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. The gulf in confidence suggests small businesses have been hit much harder by rising costs than larger ones.

Investment plans

The Business Confidence Survey from NIQ and Zonal also uncovers leaders' investment priorities in 2026. 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.

While 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.

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 16,000 hospitality sites. The research was conducted in February and early March 2026.

NIQ revealed the findings of the latest survey at a special Business Leaders Briefing event in London, attended by more than 50 leading operators.