One in seven Scottish pubs and restaurants 'considering closure' amid 'brutal' conditions

A survey by the Scottish Licensed Trade Association (SLTA) found “brutal” trading conditions have led to “the most negative” results in a decade.

Profitability in 75 per cent of outlets was down in comparison with last year, and 56 per cent of outlets reported a decline of more than 10 per cent.

More than half (56 per cent) said they expected trading performance to decline in 2025, with a further 14 per cent either planning or considering closure.

This is more than double the 6 per cent who were either planning or considering closure in the SLTA’s January survey.

Cost pressures continue to have a major impact on the sector, with 67 per cent of outlets reporting increases of more than 10 per cent.

Meanwhile, almost 90 per cent said they expect the Scottish economy to decline this year.

Businesses said the hike in employers’ national insurance contributions has had an impact on staffing and opening hours. Nearly a third (32 per cent) of outlets have cut staffing levels.

More than 350 pubs, bars, restaurants and hotels contributed to the survey.

Colin Wilkinson, SLTA managing director, said: “We’ve spoken repeatedly about the many challenges Scotland’s licensed hospitality sector continues to face. In recent years, it navigated the stormy waters of Brexit, the Covid pandemic, rising utility bills, and the ongoing cost-of-living pressures that have impacted on businesses’ operating costs and consumer spending.

“However, in the 10 years that we have been conducting our market insight surveys, these findings are the most negative we have seen – these insights are extremely concerning and the only word to describe the current trading conditions is ‘brutal’. There has never been so much business uncertainty.

“Spiralling costs to businesses from the Chancellor’s hike in employers’ NICs in the Autumn Budget, which took effect in April alongside increases in the national living and minimum wage, are having a devastating impact on Scotland’s pubs, bars, hotels and hospitality venues.

“Businesses are reporting lower income as a result of current low consumer confidence and reduced footfall – and, of course, we continue to call on the Scottish and UK governments to work to support one of our key industries. The most effective way to achieve this is by reducing VAT in the licensed hospitality sector and an urgent review of the commercial rating system in Scotland.”

Mr Wilkinson added: “It is more important than ever that the Scottish Government finally accepts that hospitality is one of Scotland’s key industries and plays a crucial role in tourism, economic prosperity and employment.”

The survey found 75 per cent of businesses in the sector want the next Scottish Government after the 2026 Holyrood election to address rates discrepancies with the rest of the UK.

Conservative MSP Murdo Fraser, his party’s spokesman for the economy, said: “These deeply alarming figures are a brutal indication of how Scotland’s hospitality sector is being failed by two high-tax, left-wing governments.

“The SNP’s refusal to pass on rates relief available in England is hammering businesses here, while Labour’s National Insurance hikes are squeezing the life out of pubs, bars and restaurants across the UK.

“Pubs and restaurants are not only crucial to our economy, they are the focal point of communities up and down the country – and we can’t afford to lose them.

“Scotland’s hospitality sector needs urgent support, and only the Scottish Conservatives are committed to cutting taxes to help hard-pressed businesses and individuals.”

SNP business minister Richard Lochhead said: “We continue to call on the UK Government to reverse its decision to increase employers’ National Insurance contributions, which is having a detrimental impact on the hospitality industry.

“We are providing 40 per cent rates relief in 2025/26 for hospitality premises, including music venues with a capacity of up to 1,500 people, which is benefiting night-time businesses.

“Scotland also continues to offer the most generous small business rates relief in the UK, with around half of properties in the retail, hospitality and leisure sectors being eligible for 100 per cent Small Business Bonus Scheme relief.”