Hundreds of hospitality firms close as cost pressures take toll
The “relentless” increase in operating costs put hospitality businesses under increasing pressure in the final quarter of last year, industry figures suggest.
According to consumer intelligence firm NIQ, there were 382 fewer licensed premises at the end of December than there were three months prior, equivalent to four closures per day.
Casual dining sites and restaurants were particularly hard hit, recording 241 closures over the period, while pubs of all varieties saw a fall in the number of sites.
Other venues performed better, with the number of bars increasing by 1.0 per cent across the period while ‘large venues’ rose by 0.4 per cent.
NIQ noted that restaurants have been particularly hard hit by food inflation and higher labour costs, as a result of recent increases to the minimum wage and employers’ national insurance.
The firm also pointed to suppressed consumer confidence as a key headwind for hospitality businesses.
Budget tax rises take toll
Karl Chessell, director for hospitality operators and food at NIQ, said the acceleration in closures “shows the toll that relentless increases in operating costs are taking on hospitality.”
“The dip is particularly concerning since it came during hospitality’s most important trading period of the year, when businesses traditionally build the cash reserves to sustain them through the quieter first quarter of the new year,” he said.
The figures come ahead of the looming increase in business rates, announced in November’s Budget, which will apply to all hospitality businesses with the exception of pubs.
Hospitality firms have called on the government to extend support across the sector, or risk further closures. UKHospitality, the industry body for hospitality firms, forecasts that 963 restaurants, 574 hotels, and 540 pubs could close in 2026 without support.
A regional breakdown of NIQ’s figures showed that London’s hospitality scene enjoyed a “modest revival” in 2025 following the disruption of the pandemic.
At the end of last year there were 2,976 licensed premises in the capital, up 0.6 per cent over the previous year.
NIQ said hospitality businesses in the capital had been boosted by the steady return of workers to the office and an uptick in tourists, both from abroad and other parts of the UK.
However, the number of licensed premises remains 14 per cent below its peak in March 2020, when there were 3,462 sites across the capital.