Data from Savills shows 38 hospitality openings in Glasgow city centre during 2025, indicating continued demand for prime hospitality locations despitesignificant trading pressures, but estimates suggest operating profit margins in the industry could now be as low as three percent, with many new businessowners warning expansion or continued growth is now impossible.

Henderson Loggie’s Head of Food and Drink in Scotland, Matthew McDermott, is leading calls for targeted long-term action for the industry, including a review ofthe recent increase in employer’s National Insurance Contributions and a permanent cut in VAT. Scotland’s food and drink industry also faces some of the highest VAT burdens in Europe. In Ireland, restaurant and catering services pay 9 percent, while in Germany, it’s 7 percent and the majority of food and drink relatedhospitality businesses in France, Italy and Spain pay 10 percent.

The recent announcement from the Prime Minister, Andy Burnham, that pubs, clubs and live music venues would benefit from a 20 percent cut in business ratesfrom April next year has been broadly welcomed by the industry, but leaders are calling for much deeper action and – with no confirmation from Holyrood yet -there remains uncertainty over whether venues in Scotland will see any of the planned benefits.

Matthew McDermott commented: “Given the recent growth within parts of the food and drink sector, it could be tempting to be complacent and hope for the best, but the industry is facingchallenges that could genuinely put a hard brake on its long-term sustainable, successful future. Producers and exporters are continuously faced with increasedregulatory burdens and spiraling cost pressures, not helped by the current geopolitical turmoil and endless inflationary pressures. For the hospitality sector, thepressures are largely homegrown with increasing costs and regulatory burdens chipping away at already slim profits.”

“When you read about the myriad of challenges facing the industry, it’s hard to imagine who would decide to enter and lead such a difficult sector, but that’sexactly why we need to support Scotland’s food and drink producers, exporters and hospitality providers. In some of the toughest of times, they’ve chosen toinnovate and expand – providing employment and significant economic output. Food and drink has long been a core part of the Scottish economy and its successor failure will impact everything from tax revenues to employment figures and even the future of our struggling High Streets. Now is the time for politicians toshift gear from promises to policy and help an industry that is at the heart of Scotland’s future success.”