UK restaurants shrink as consumers cut dining out amid rising costs

The UK restaurant industry is contracting because customers are eating out less while running costs climb. Data and operator reports indicate the sector shed a material portion of sites, tightened margins, and faces continued cashflow stress.

Consumer behaviour has shifted noticeably: a representative poll found 38% of 2,000 people now report dining out less than a year earlier, and among those, the majority pointed to price rises. Operators cite rising line-item costs—wages, energy, food input prices and regulatory levies—that reduce gross receipts and force menu adjustments. One independent restaurateur calculates roughly £55 per £100 of takings is consumed by taxes and statutory charges, leaving limited funds for essentials like utilities, rent and staff pay.

The result is a feedback loop: venues raise prices to survive, which weakens demand further. Some owners temporarily skip taking a wage to preserve payroll for staff, and a subset of businesses have closed outright, weakening local retail ecosystems.

• Restaurants operating (Dec 2019): 43,000
• Restaurants operating (Dec 2025): 35,500
• Net change: −17.4% (~7,500 fewer outlets)
• Survey - eating out less: 38% of 2,000 respondents
• Among those citing reasons: 63% price rises; 62% cost-of-living pressures
• Behavioural shift: 46% report skipping desserts to save money

Local and national knock-on effects are clear: fewer dining destinations reduce footfall for adjacent shops and limit entry-level job opportunities. Trade groups warn continued outlet decline will erode high-street appeal and community amenities unless margins are restored.

Policy levers that could relieve pressure include targeted rate relief, energy support, or measures to reduce statutory cost burdens. Yet those steps address supply-side pain only; broader real-wage recovery or improved household disposable income is required to rebuild sustained consumer demand.