According to Tokyo Shoko Research, 118 izakaya - a traditional Japanese pub model - went bankrupt in the first 6 months of 2026. This is the highest number of bankruptcies in the first half of the year since the data was compiled in 1989.
Nearly 90% of bankrupt businesses said that the decrease in sales was the cause. Notably, all except 3 of these businesses have fewer than 10 employees, showing that small-scale eateries and pubs are being greatly affected by the difficult business environment.
Small izakaya restaurants face increasing food and labor costs. Meanwhile, revenue from business parties and parties - which are important customers of izakaya - continues to decline.
According to a survey by Tokyo Shoko Research, 57.2% of Japanese businesses organize or plan to organize bonenkai and shinnenkai parties (year-end and New Year parties) in the 2025-2026 season. This figure is a sharp decrease compared to 78.4% before the pandemic.
The difficult situation of izakaya restaurants is part of the increasing trend of bankruptcy restaurants in Japan. According to Teikoku Databank, in 2025 there were 900 bankruptcy restaurants, a record high and the third consecutive year the number of bankruptcies has increased.
Bars and beer stalls, including izakaya, accounted for the largest number of bankruptcies with 204 cases.
One of the reasons why restaurants face difficulties is the limited ability to convert increased costs into selling prices. Teikoku Databank estimates that restaurant businesses can only convert about 32.3% of cost increases into selling prices, significantly lower than the average of 39.4% of industries.
Increased input costs while consumer demand and business meetings and parties have not fully recovered are creating more pressure on small-scale food businesses in Japan.
