Almost one in four pubs and restaurants losing money

By the Editorial Team · Wednesday, July 1, 2026

Nearly one in four pubs and restaurants in Britain are currently losing money, with 5 percent deemed non-viable and many fearing closure within a year due to rising costs and high taxes. Industry leaders and politicians are pushing for a reduction in hospitality VAT, arguing that lower taxes are crucial to help the sector survive and support local communities.

Nearly one in four pubs and restaurants in Britain are currently operating at a loss, according to a recent survey from several hospitality industry groups. The findings reveal a significant increase from just three months ago, when 15 percent of operators reported losses. The survey, conducted by UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping, and Hospitality Ulster, also found that 5 percent of businesses have become non-viable, while one in six fear closure within the next year.

These figures come amid growing pressure on the UK government to reduce the tax burden on the hospitality sector. The move follows the Republic of Ireland’s decision to lower its value-added tax (VAT) rate for hospitality businesses to 9 percent starting in July, prompting calls for similar action in Britain. Currently, pubs and restaurants in the UK face some of the highest tax rates in Europe, which industry representatives say are undermining their ability to recover from recent economic challenges.

Leading the campaign for a VAT reduction is television chef Tom Kerridge, who has received support from prominent figures in the industry, including the leadership of Greene King and WahaCa. Kerridge, a supporter of the Labour Party, has expressed dissatisfaction with the government’s current stance on tax relief and has indicated that the hospitality sector would feel let down if promised tax cuts fail to materialize.

Andy Burnham, the Labour MP for Makerfield and a likely successor to Sir Keir Starmer as party leader, has previously voiced support for a lower VAT rate for pubs and restaurants. Speaking at an event hosted by the Night Time Industries Association last year, Burnham emphasized the social value these businesses bring to local communities and towns, arguing that a reduced tax rate could help revitalize these areas.

Despite these calls, recent budgets have added further financial pressure on the sector through increased employment and property taxes. In response to rising business costs, Chancellor Rachel Reeves implemented an emergency tax relief measure in January aimed specifically at pubs. However, many industry leaders argue that this intervention has not gone far enough to offset the substantial inflationary pressures the sector faces.

Data from payments provider Dojo highlights the scale of the cost squeeze, reporting that operating expenses for pubs and bars have increased nearly 50 percent since 2015 due to factors including inflation and business rates. These mounting costs threaten the long-term sustainability of many hospitality businesses, exacerbating concerns about widespread closures and economic impact.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.