Northern Ireland hospitality industry at breaking point: Pessimism deepens as consumers pull back

Northern Ireland’s hospitality sector is facing a critical moment of reckoning. The latest CGA by NIQ Trade Association Members Survey for Q4 2025 reveals a landscape marked by financial fragility, declining consumer engagement, and urgent calls for government intervention.

From pubs and cafés to hotels and restaurants, operators are sounding the alarm: without immediate support, the sector risks widespread collapse.

Operator sentiment: Confidence crumbles

The report shows a stark erosion of optimism:

• Only 26% of operators feel optimistic about their own business prospects.

• Just 22% are optimistic about the market as a whole.

• 35% are fairly pessimistic, and 28% very pessimistic about their own business outlook.

• When asked about the broader market, 39% are fairly pessimistic, and 43% very pessimistic — nearly two-thirds in total.

This pessimism is not abstract. It’s rooted in hard financial realities.

Profitability and revenue: A sector in decline

In Q3 2025:

• Only 33% of businesses made more profit than the same period in 2024.

• 28% broke even, while 18% operated at a loss or are now unviable.

• 44% reported lower revenue than last year, with just 24% seeing growth.

These figures reflect a sector struggling to recover from years of economic shocks — from COVID-19 to inflation and energy crises.

Cash reserves and business viability: Running on empty

The financial cushion for many operators is dangerously thin:

• 32% have no cash reserves whatsoever.

• 21% have only 1–3 months of reserves, and 23% have 4–6 months.

• Only 8% have more than 10 months of reserves.

When asked about the risk of failure:

• 20% say their business is at risk within 4–12 months.

• 6% fear collapse within 1–3 months.

• 30% are unsure, adding to the climate of uncertainty.

Government support: VAT relief tops the agenda

The survey reveals a near-unanimous call for VAT reform:

• 93% of operators want a reduction in hospitality VAT.

• 46% support discounts on business rates multipliers.

• 41% call for rate alignment across devolved nations.

• 35% want changes to Employer National Insurance Contributions.

Ulster Unionist MLA and Economy spokesperson Diana Armstrong issued a strong statement in response:

“The figures demonstrate a clear need for action for an industry that is crying out for support. Hospitality is not just about pubs, cafés, and restaurants; it’s a cornerstone of our tourism offer and a vital artery for our local economy.

“Without meaningful action such as reducing hospitality VAT or providing business rates support, we risk widespread closures that will devastate our offering across Northern Ireland.

“I hear daily about the pressures being experienced within my own constituency, which borders a jurisdiction with current VAT rates of 13%, soon to be reduced to 9%. It is essential that these businesses are given some prospect of support to remain competitive.”

Labour cuts and investment freezes: A bleak outlook

Since April 2025’s operational cost changes:

• 70% of operators reduced staff hours.

• 58% increased prices.

• 43% cut trading hours and staff numbers.

• 38% cancelled planned investments.

Looking ahead to the November Budget:

• If support is not forthcoming, 56% plan to reduce staff, 52% will cut hours, and 46% will cancel investments.

• 33% will defer pay increases, and 25% will reduce training budgets.

This signals a sector bracing for further contraction — not growth.

COVID-19 loans: Lingering debt burden

Pandemic-era loans continue to haunt operators:

• 56% took out Bounce Back Loans, 15% accessed CBIL, and 2% used CLBIL.

• 75% say these loans are causing moderate or significant financial impact.

• Only 42% have repaid their loans.

• 58% expect repayment to stretch into 2026 or beyond, with 13% anticipating repayment in 2028 or later.

Consumer sentiment: Easing pressures, but visits still down

The cost-of-living crisis is softening — but not enough to reverse behavioural shifts:

• 38% of consumers still feel severely impacted.

• Compared to October 2024:• Severe impact down 5pp

• Moderate impact down 10pp

• “A little” impact up 19pp

Despite this easing:

• 36% of consumers are going out less frequently, while only 17% are going out more.

• Looking ahead, 29% expect to reduce visits in the next month — down 11pp from last year.

Sales and pricing trends: Volume down, prices up

Sales declines are evident across all drink categories (MAT to September 2025):

83% of consumers say cost-of-living increases are a reason they’re going out less.

Conclusion: A sector on the brink

The CGA by NIQ Q4 2025 report delivers a clear message: Northern Ireland’s hospitality sector is in crisis. With operators facing mounting debt, shrinking margins, and declining footfall, the November Budget is seen as a last chance to avert widespread closures.

As Diana Armstrong warns, hospitality is more than a business — it’s a backbone of Northern Ireland’s economy. Without swift intervention, the consequences could ripple across communities, jobs, and tourism for years to come..