Restaurants, hotels and pubs saw the slowest rise in new business since 2013, hampered by an increasingly overcrowded market and uncertainty over the EU referendum.
It follows a boom in growth for the sector with 1,770 new restaurants opening between October 2014-15.
Over the past decade the number of chain restaurants has increased by 55 per cent, a rise which Horizons warned was unsustainable.
Now growth in the sector has slowed almost to a standstill, according to a report by Markit and the Chartered Institute of Procurement and Supply (CIPS).
David Noble, group chief executive officer at CIPS, said: “The sector appeared to have pressed ‘pause’ on significant progress during March, with the level of new business rising at its slowest pace since January 2013.”
Restaurants, pubs and hotels were also limited by ongoing skills shortages, with some employers forced to pay higher wages to retain good staff, Noble said.
The report showed a slight rise in growth in March. The Business Index rose to 53.7, up from a 35-month low of 52.7 in February. Any figure above 50 indicates expansion.
However, Noble admitted that growth was unlikely to pick up over the next three months, with businesses showing a ‘hesitancy to commit’ to larger investments and expansion.