The Times reported that pre-tax profits at Britain's 100 largest restaurant groups fell 44% in a year. We looked below them, at the 126,392 independent restaurant, café, pub and catering companies with none of the same buffers — and found a third of their operating profit gone before the April cost rises reached a full year of accounts.
The Times reported in August 2026 that pre-tax profits at Britain's 100 largest restaurant groups fell 44% in a year, on turnover that rose to £13.3bn. Employment costs and ingredient inflation took the blame. The Top 100 have private-equity backing, procurement leverage and technology budgets, and their profits still nearly halved.
We looked below them, at the 126,392 independent restaurant, café, pub and catering companies on the Companies House register: the businesses with none of those buffers. This is what their accounts show.
Among the 9,790 independents that earned £25,000 or more the year before, aggregate operating profit fell 33% in the latest filed period. Two thirds made less than the year before. Almost a quarter fell out of profit altogether.
| Prior-year earnings | Profit change | Companies | Share that fell |
|---|---|---|---|
| Earned £25,000 or more | −33.2% | 9,790 | 66.7% |
| Earned £50,000 or more | −32.7% | 6,059 | 66.8% |
| Earned £250,000 or more | −33.0% | 1,136 | 66.0% |
| The threshold exists because a percentage change is meaningless on a near-zero or negative base. Across ALL 46,688 companies with two comparable periods the aggregate change is −3.6%, and across the 19,139 holding more than £100k of assets it is −5.1% — both dominated by companies with almost no profit to lose. They answer a different question and are not a contradiction. | |||
Size bought no protection. A business earning £50,000 lost as much of its profit, proportionally, as one earning £500,000 — about a third at every scale, which puts the independents within reach of the Top 100's 44%. Only the very largest fell further, at 48%, though that band holds eleven companies.
| Prior-year earnings | Profit change | Companies |
|---|---|---|
| Under £25k | −7.2% | 20,279 |
| £25k – £100k | −36.6% | 6,506 |
| £100k – £250k | −30.7% | 2,148 |
| £250k – £1m | −29.4% | 936 |
| £1m – £5m | −31.9% | 189 |
| Over £5m | −48.2% | 11 |
| The top band is 11 companies. It is the largest fall on the page and the smallest sample on it, and it should not be quoted without that number beside it. The bands between £25k and £5m carry between 189 and 6,506 companies each and all land within seven points of one another. | ||
Pubs are worst hit, down 41% across 2,529 companies. Restaurants fell 32%, caterers 27%.
| Trade | Profit change | Companies | Share that fell | Fell into loss |
|---|---|---|---|---|
| Pubs & bars | −41.2% | 2,529 | 66.8% | 23.9% |
| Restaurants & cafés | −31.7% | 5,547 | 66.5% | 22.9% |
| Caterers | −26.6% | 1,714 | 67.1% | 22.3% |
| Roughly two thirds of companies in every trade made less than the year before, and between 22.3% and 23.9% crossed from profit into loss. The trades differ in how far the aggregate fell, not in how widely. | ||||
Everyone has a culprit for this, and it is April 2025. Employer National Insurance went from 13.8% to 15%, and the point at which an employer starts paying it dropped from £9,100 to £5,000. UKHospitality costed the package at £3.4bn a year across the sector — £1.9bn in wages, £1bn in National Insurance, £0.5bn in business rates — and roughly a tenth on the cost of employing one person.
It is not where this started, and the accounts show why. A set of accounts covers a year, and companies do not all run to the same year. 36.1% of the businesses here have a year that ended before the new rates began, so nothing in their figures has been touched by the rise at all. The typical one still lost 32.6% of its operating profit, and 64.6% of them went backwards. A third was gone before the tax arrived.
Where the accounts do contain the rise, the falls are a little steeper and more companies are caught by them: every band that includes any of it has a higher share going backwards than the band that includes none. So the rise is doing something. It is just not the thing that started this.
| Accounts contain | Typical company | All together | Share that fell |
|---|---|---|---|
| None of it | −32.6% | −35.8% | 64.6% |
| Under 6 months | −37.9% | −33.6% | 67.9% |
| 6 to 12 months | −33.5% | −25.2% | 67.4% |
| A full year | −45.4% | −45.0% | 74.4% |
| 36.1% of the comparison runs to a year-end before 6 April 2025, so nothing in those figures has been touched by the higher employer National Insurance or the wage rates that came with it. The typical company among them still lost 32.6% of its operating profit, and 64.6% of them fell. | |||
None of this puts a number on what the rise cost, and it cannot: companies do not choose their year-ends at random, and the groups differ in other ways. What it does settle is the sequence. The decline was already running when the Budget arrived.
That changes what kind of problem this is. A business knocked over by one tax change can hope the next Budget puts it back. A business that was already sliding has nothing to wait for — and this trade has nothing much to pull, either. It cannot raise prices without losing covers, and it cannot cut staff without cutting the service it sells: headcount across these companies held flat while a third of the profit disappeared. That is the real finding. The April rises are not the cause of the squeeze; they are what removes the option of sitting it out.
The median independent runs on an operating margin of 5.6%. Even at the 75th percentile it reaches only 11.7%. Across the 24,677 companies we can measure one for, 20.1% are loss-making — against 37 of the Top 100.
But the median independent restaurant, contrary to assumption, does not lose money. Its margin is 5.3%, with pubs at 5.8% and caterers at 6.8%. Hotels, outside the food-service core, manage 11.2%.
| Trade | Median margin | Companies | Loss-making |
|---|---|---|---|
| Hotels & accommodation | 11.2% | 7,002 | 24.4% |
| Caterers | 6.8% | 3,942 | 18.3% |
| Pubs & bars | 5.8% | 6,044 | 19.2% |
| Restaurants & cafés | 5.3% | 14,691 | 21.0% |
| Across all 24,677 companies with a measurable margin the median is 5.6% and the 75th percentile reaches only 11.7%. 20.1% are loss-making, against 37 of the Top 100. | |||
The two are not like for like. The Top 100 report pre-tax profit, struck after interest on leveraged balance sheets, and came in around 1.5% of turnover this year. Measured the same way, the independents that file a full account come in at 2.0% — the same territory.
The median independent turns over £36,600 per employee and employs four people. The trade employs just under 1.1 million in total.
On a 5.6% margin, a few hundred pounds more per head — in employer National Insurance, in the wage floor — is the difference between that margin and half of it. A group with 300 sites can spread the cost. A business with four staff cannot.
They did not cut staff to pay for it. Headcount held roughly flat across the same accounts in which profits fell a third — which, in a business that sells service, may be the only option there is. Shrink the team and you shrink the revenue with it.
April 2026 asks for more. The National Living Wage rises 4.1% to £12.71 an hour and the rate for 18- to 20-year-olds 8.5% to £10.85, which UKHospitality costs at a further £1.4bn across the sector. It lands on a base that has already lost a third of its profit.
This is not an ageing trade. Across all active UK companies, 32.5% have a director aged 60 or over; independent food-service companies come in at 21.0%, and restaurants at 17.3% — among the youngest ownership profiles on the register. A quarter of the cohort incorporated within the last three years, median director tenure is under five years, and seven in ten companies are run by a single director. The cost squeeze is landing on a young, high-churn trade with little structure to absorb it.
| Activity | Oldest director 60+ | 70+ |
|---|---|---|
| Hotels & accommodation | 44.3% | 19.9% |
| Pubs & bars | 34.6% | 11.6% |
| Other leisure | 28.9% | 10.8% |
| Caterers | 20.2% | 5.5% |
| Restaurants & cafés | 17.3% | 4.3% |
| All active UK companies | 32.5% | 11.8% |
| Independent food-service companies come in at 21.0% overall against 32.5% for the whole register — restaurants are one of the youngest ownership profiles we measure. The age risk sits in pubs and, one tier further out, hotels. | ||
The age risk sits one tier up: 34.6% of pubs have a director aged 60 or over, and hotels are older still at 44.3%. In pubs, that comes on top of the worst profit fall in the trade and its highest insolvency rate. Where hospitality does have an ownership problem, it is stacked on the margin problem rather than separate from it.
Hospitality carries one of the highest distress rates of any UK sector: 6.4% of its companies are in strike-off proceedings and 0.9% in insolvency, against 4.2% and 0.5% for the services sector. Restaurants are the most distressed activity of all, with 9.0%, nearly one in eleven, currently on the strike-off path. Pubs hold the sector's highest insolvency rate at 2.3% — the same trade that lost the most profit.
| Activity | In strike-off | Insolvent |
|---|---|---|
| Restaurants & cafés | 9.0% | 1.7% |
| Caterers | 7.5% | 0.8% |
| Other leisure | 6.5% | 0.7% |
| Pubs & bars | 6.2% | 2.3% |
| Hotels & accommodation | 3.9% | 0.8% |
| Hospitality as a whole runs at 6.4% in strike-off and 0.9% insolvent, against 4.2% and 0.5% for the services sector. Pubs carry the sector’s highest insolvency rate, consistent with their profit numbers. | ||
These closures are not retirements in disguise. Of the companies currently closing, 17.9% have a director aged 60 or over, slightly below the cohort's 21.0%. These are younger-run businesses leaving through the cheapest door available — the pattern we found across the wider economy in profitable businesses closing instead of selling. In hospitality, the door is just busier.
What goes through it is not only failed businesses. 4,870 independents show credible exit signals on a sound underlying business, and between them hold £1.23bn in net assets, £5.61bn in revenue and 91,707 jobs. Each faces the same three exits as the rest of the trade: pass the business on, sell it, or close it. The register shows which one is winning.
The Top 100 will restructure, refinance and consolidate their way through this cost environment. The 126,392 companies underneath them will not all get that choice.
Figures are drawn from ExitRadar's analysis of the full Companies House register, measured in August 2026. The independent cohort excludes subsidiaries, group-owned vehicles and corporate-controlled companies: 11,217 companies were removed from 137,609 on those grounds.
Over 98% of these companies file accounts with no profit and loss statement, so ExitRadar recovers per-period operating profit from filed figures and estimates revenue where no filing exists. Where both a derived and a filed operating profit exist for the same company across the same two periods — 528 of them — the two agree on the direction of change for 99%, and the aggregate change differs by 0.14 percentage points.
The profit comparison uses the 19,136 companies for which we hold two consecutive annual periods, with the same company on both sides of the comparison.
Profit-change figures cover companies with two consecutive annual periods and £25,000 or more of prior-year earnings, because percentage changes on near-zero or negative bases are not meaningful; the result is stable across thresholds to £250,000. Margin figures are operating margins and are not directly comparable with the Top 100's pre-tax figure. Director ages use the oldest serving director, the same basis as our UK Business Succession Index. Strike-off and insolvency figures are the share of companies in that state at the measurement date, not an annual rate: the register data we hold carries no usable dissolution dates, so no closure rate is derived from it here.
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