Japan records a record number of izakaya bankruptcies in the first half of the year
In Japan, 118 izakaya establishments — Japanese pub-restaurants — went bankrupt in the first half of 2026. This is the highest figure for a first half since 1989 and the first time the number of such bankruptcies exceeded 100 in six months, The Japan Times reports.
According to Tokyo Shoko Research, nearly 90% of the establishments that went bankrupt cited sluggish sales. All but three had fewer than 10 employees. Small izakaya are under pressure from rising food and labor costs, as well as a decline in traditional occasions for corporate dinners.
Possible impact of the tax change
An additional risk for the restaurant business could be the government’s planned two-year reduction of the consumption tax on food purchased for home consumption. Currently, most such food is subject to a reduced 8% rate, while dining out and alcohol are taxed at 10%.
Starting next April, the rate for food for home consumption is planned to be reduced to 1%. Naoko Ogata, a senior economist at the Japan Research Institute, said that a seven-percentage-point reduction could encourage some consumers to shift toward eating at home. Restaurant operators fear that cheaper supermarket food and ready-made meals from stores could reduce visitor traffic, although the actual impact of the tax change remains uncertain.
Corporate parties and prices
According to a Tokyo Shoko Research survey, 57.2% of Japanese companies held or planned to hold bonenkai and shinnenkai parties during the 2025–2026 season. Before the pandemic, this figure was 78.4%. Such gatherings at the end and beginning of the year have traditionally been an important source of group orders for izakaya.
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A 2022 analysis by NLI Research Institute showed that among people in their 20s who are legally allowed to drink alcohol, around 27% drink rarely or no longer drink. Including those who do not consume alcohol at all, approximately half of men and 60% of women in this age group mostly live without alcohol.
In 2025, a record 900 restaurant operators went bankrupt in Japan, marking the third consecutive year of growth in the figure, according to Teikoku Databank. The largest number of bankruptcies, 204, was recorded in the bars and beer halls category, which includes izakaya.
According to Teikoku Databank estimates, restaurants pass on only 32.3% of cost increases in their prices, below the 39.4% average across all industries. Analyst Naohiro Fujimoto noted that large companies have more opportunities to raise prices, while small operators are more vulnerable.
Sunny Yasuda, the owner of restaurants in Tokyo, believes that establishments should offer customers not only food but also atmosphere and an opportunity to spend time with friends. At the same time, he said that visitors who are particularly price-sensitive may have already reduced how often they go to restaurants.
