Nearly 90% of the failed businesses cited sluggish sales as a factor, while all but three had fewer than 10 employees, according to Tokyo Shoko Research, Japan’s first and oldest credit reporting agency, The Japan Times reported.
Small izakaya are facing growing pressure from higher food and labor costs, along with a decline in corporate drinking and dining events that have traditionally provided significant group business, Japan Today reported.
A Tokyo Shoko Research survey found that 57.2% of Japanese companies held or planned to hold bonenkai and shinnenkai parties (year-end and New Year gatherings) during the 2025-2026 season, down sharply from 78.4% before the pandemic.
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People enjoy drinks and food at an izakaya pub restaurant at the Ameyoko shopping district, in Tokyo, Japan, Feb. 15, 2024. Photo by Reuters |
A record 900 restaurant operators went bankrupt in Japan in 2025, marking the third consecutive annual increase, according to Teikoku Databank.
Bars and beer halls, a category that includes izakaya, accounted for the largest share, with 204 bankruptcies.
Restaurants are also struggling to pass rising costs on to customers.
Teikoku Databank estimates that they reflected just 32.3% of cost increases in their prices, below the 39.4% average across all industries.