Scotland’s wider hospitality sector has been grappling with what industry bodies describe as “brutal” trading conditions, with higher national insurance contributions, wage rises and business rates all eroding margins. Trade groups warn that many pubs, restaurants and hotels are now either loss‑making or close to it, as consumers’ disposable incomes remain under pressure and operators struggle to pass on rising costs in full.
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Recent fiscal decisions at both Holyrood and Westminster have intensified pressure on larger hospitality and catering firms, which benefit less from small business reliefs and face steeper tax and regulatory burdens. Industry leaders argue that Scotland’s failure to match the more generous rates support offered to hospitality in England leaves domestic operators at a competitive disadvantage, especially when combined with increased employer national insurance and higher minimum wages.
Across the sector, top‑line revenue has often held up or grown as operators push through price increases and expand contracts, but profitability has deteriorated as cost inflation outpaces sales growth. Survey data from Scottish hospitality businesses shows that around three quarters have seen profits fall, with a majority expecting to make a loss, underlining why even large catering groups with strong order books can see earnings squeezed.
To protect margins, many operators are trimming opening hours, restructuring staffing models and reviewing capital investment plans, with some scaling back venue openings or pausing expansion in Scotland altogether. Trade associations are now stepping up calls for targeted rates relief, reform of the non‑domestic rates system and a more supportive fiscal framework, arguing that without intervention more closures and job losses are likely in 2026–27.
