The research, conducted by UKHospitality, the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII) and Hospitality Ulster, found that 23% of hospitality businesses are now operating at a loss, up from 15% three months ago, and 5% have said their business is no longer viable.
The survey, carried out between 19 May and 9 June 2026, included operators representing more than 16,000 hospitality venues. Almost nine in 10 respondents (89%) said cutting VAT on hospitality would be the most impactful measure the Government could take to support the sector.
The findings were unveiled at a press launch on Monday (29 June) at Kerridge’s Bar & Grill at the Corinthia Hotel, ahead of the campaign’s public rollout.
Chef Tom Kerridge, who is spearheading the campaign, was joined by supporters including Ravneet Gill, owner of Gina’s in Chingford, Thomasina Miers, co-founder of Wahaca, and Mandy Yin, whose restaurant Sambal Shiok recently closed due to rising cost pressures.
The campaign has already attracted more than 235,000 signatures on a petition calling for hospitality VAT to be reduced from 20% to 10%, bringing the UK more closely into line with many European countries where the sector benefits from lower VAT rates.
From 1 July, hospitality businesses across the UK will begin encouraging customers to support the campaign, with the aim of reaching one million signatures.
“We need every hospitality business up and down the country to start driving this forward by getting people to sign the petition.” says Kerridge.
“We’ve launched the campaign, but now it’s up to the industry to keep the momentum going. Every pub, bar, restaurant and café needs to get the QR codes in front of their guests and help us reach one million signatures.”
The launch also coincides with the Republic of Ireland reducing its hospitality VAT rate to 9%.
Steve Alton, chief executive of the BII, adds: “VAT is absolutely critical right now.
“It’s never been as bad as this because, despite positive trading and high footfall, we’re just not able to convert that into profit.
“There’s a real sense of urgency. We’ve already seen more than one hundred thousand jobs lost and the resilience is no longer there.”
To pass on any reduction or not?
Some operators suggested a VAT cut could see customers benefit through lower menu prices.
“Wahaca was born on the premise that good food should be affordable for all,” says Miers.
“But if you take a taco where £2 goes to the chancellor and 20p goes to us, that is completely unsustainable.
“If that £2 shrunk to £1 and our profit margin improved, of course we’d look at passing some of that benefit on to customers."
Kerridge, however, reinforced that ultimately the VAT reductions are intended to help hospitality businesses.
“Some businesses may be able to offer some reductions,” he says.
“But the reality is that a reduction in VAT should be coming back into the business.
“This is about surviving and having the ability to grow and move forward.”