New industry figures have revealed a stark surge in hospitality business closures across the United Kingdom during the final quarter of 2025, casting a shadow over the sector's future as it faces impending tax increases. According to data from market intelligence firm NIQ, the industry experienced a net loss of 382 venues between October and December 2025, equating to an average of four closures every single day.
A Downbeat End to the Year
This sharp decline marked a significant reversal from the first nine months of the year, which had seen a period of slight growth in venue numbers. By the end of December 2025, the total count of hospitality sites in the country—encompassing pubs, restaurants, cafes, and similar establishments—stood at 98,914. The timing of these closures is particularly concerning, as they occurred during the crucial festive trading period when businesses typically generate vital revenue to sustain them through the quieter early months of the new year.
Restaurants and Casual Dining Bear the Brunt
The data highlights a pronounced downturn within specific segments of the market. The restaurant sector witnessed a 1% contraction between September and December, while the casual dining segment suffered a more severe 1.8% decline. In total, these two categories accounted for 241 of the net closures. Industry experts point to a combination of relentless inflationary pressures on core operational costs, fragile consumer confidence, and reduced discretionary spending as the primary drivers behind this trend.
A Mixed Picture Across the Sector
However, the picture was not uniformly bleak across the entire hospitality landscape. In a notable contrast, the bar sector demonstrated resilience, recording a 1% increase in venue numbers compared to the previous quarter. This suggests a shift in consumer behaviour, with many patrons opting to spend on drinks rather than committing to the higher costs associated with full meals.
Looming Threat of Higher Taxes
The closure data emerges against a challenging economic backdrop, with sector leaders issuing stark warnings about the impact of forthcoming changes to business rates. Most hospitality firms are anticipated to face higher tax liabilities from the next financial year following announcements in the autumn budget. While the Government has signalled plans to unveil additional support measures specifically targeted at pubs, other vital parts of the industry—including hotels and live music venues—have cautioned that without similar assistance, they may be forced to implement significant price hikes or cease operations entirely.
Expert Analysis Points to Tough Times Ahead
Karl Chessell, Director for Hospitality Operators and Food at NIQ, provided a sobering assessment of the situation. "An acceleration in closures in the final quarter of 2025 shows the toll that relentless increases in operating costs are taking on hospitality," he stated. "The dip is particularly concerning as it came during hospitality’s most important trading period of the year. Despite the Government’s recent rethink on rates for pubs, conditions are unlikely to get any easier in 2026, and business confidence and sales growth both remain weak." This analysis underscores the sector's precarious position as it navigates a landscape of rising costs and uncertain fiscal policy.
