The hospitality sector experienced a renewed decline in the first half of 2025, with 62 net closures per month since the beginning of the year, new data shows.
According to the latest hospitality market monitor from CGA by NIQ and AlixPartners, since the start of the pandemic, hospitality has seen 16,000 net closures, with the sector now 14.2% smaller than it was in March 2020.
Food-led venues have suffered more than drink-led ones, contracting nearly 3% in a year. The monitor found that independent and casual dining restaurants were particularly affected, with 22.7% less independent restaurants now than there was pre-pandemic.
The report attributed the downturn to increased cost pressures from government tax policies and new employment costs.
As of April 2025, employers’ National Insurance contributions rose by 1.2 percentage points to 15%, while the threshold for companies to start paying lowered from £9,100 to £5,000.
“These latest figures are a devastating blow, showing in the starkest terms the impact of the government-driven cost pressures,” said UKHospitality chair Kate Nicholls.
“Two hospitality venues closing every day is not just a statistic; it represents the hollowing out of our high streets and communities. Independent businesses, the lifeblood of our sector, are being disproportionately crushed under the weight of unfair taxation and soaring employment costs.
“The result is a sector in survival mode, where investment is at a standstill. Businesses are being forced to focus on just keeping the lights on, and growth is secondary.”
The report warned that the likely impact will be a round of company restructurings in the second half of the year. Nicholls added that the sector was running the risk of being “taxed out of existence”.
Ahead of the budget, the trade group is calling for urgent action to lower business rates, fix NICs and cut the rate of VAT.
“Without these changes, we will see this alarming trend of closures accelerate, costing thousands more jobs and decimating high streets across the UK,” Nicholls added.
No comments yet