Hospitality warns of price rises as National Living Wage climbs again

The National Living Wage is due to increase again in April 2026, with the government setting out higher statutory pay floors ahead of the Autumn Budget. The headline change is a 50p-an-hour rise for workers aged 21 and over, taking the rate to £12.71. Ministers say the move will lift incomes for millions, while hospitality leaders warn it could add substantially to running costs and feed through into menu prices.

What is changing

From next April, the legal minimum for over-21s will rise by 4.1 per cent to £12.71 an hour. For a full-time worker on a 37.5-hour week, the Treasury calculates this as roughly £900 extra a year.  

Younger workers will see larger percentage increases:

• Staff aged 18 to 20 will move to £10.85 an hour, up 85p, an 8.5 per cent rise. The government says it wants to phase out this lower band over time in favour of a single adult rate.

• Apprentices and 16 to 17-year-olds will rise to £8 an hour, from £7.55, a 6 per cent uplift.

Chancellor Rachel Reeves said 2.7 million people are expected to benefit and argued that higher minimum pay remains central to easing cost-of-living pressures.

The wider policy context

The rises follow sharp increases in recent years. Last April, minimum pay for over-21s rose 6.7 per cent, with the 18–20 rate up 16.3 per cent. Those changes came alongside higher employer National Insurance contributions, leaving many operators reporting a double squeeze on labour costs.

The Treasury says the 2026 rates strike a balance between workers’ needs and business affordability, and the Low Pay Commission, which recommended the uplift, believes previous increases have not had a significant negative effect on employment overall.  

However, think tanks and business groups are increasingly focused on the pace of change for younger workers. The Resolution Foundation described the 18–20 rise as unusually large, warning it could make firms more cautious about hiring people in that bracket.  

What hospitality is saying

UKHospitality, which represents more than 700 companies and over 123,000 venues, said the new rates would add around £1.4 billion to the sector’s wage bill. The organisation argues that most businesses have exhausted their ability to absorb additional labour costs and will pass them on through higher prices.

Kate Nicholls, UKHospitality chair, said that wage inflation is arriving on top of other cost pressures and warned it could contribute to broader inflation if replicated across menus and service charges. She also said hospitality plays a major role in providing first jobs and progression routes, and that steep youth-rate rises risk undermining that function.

The British Chambers of Commerce echoed the warning, saying repeated above-inflation uplifts tend to reduce investment headroom and hiring appetite, particularly among smaller employers.  

Why this matters for fish and chip operators

Fish and chip businesses sit at the sharp end of wage policy for three reasons.

First, labour is already one of the largest controllable costs in a typical shop, especially where opening hours stretch into evenings and weekends. A statutory rise of this size lifts not just headline wages but also differentials for supervisors, fryers, and experienced counter staff.

Second, the move comes while many operators are still navigating elevated input costs, including cod, energy and raw materials, making cost-recovery harder without losing value-focused customers.

Third, the bigger uplift for 18–20-year-olds may affect staffing models that rely on part-time younger workers for peaks. If youth rates converge faster towards the adult rate, some shops may re-think rota structures, training investment, or automation choices.

There is already evidence that employers in hospitality respond to minimum wage rises through a mix of slower recruitment, reduced hours, or price increases. The industry points to these trade-offs as the key risk in 2026.  

Pressure points to watch in 2026

Several questions now follow for the sector:

• Pricing power versus demand. Operators may need to test carefully how far price rises can go before footfall or basket size weakens, especially in value-sensitive coastal and community markets.

• Youth employment. With nearly a million young people classed as not in employment, education or training, hospitality leaders say the sector’s entry-level role should be supported rather than made more expensive.  

• Business rates and tax policy. UKHospitality is urging the Budget to deliver meaningful business rates reform, including the maximum possible discount for hospitality properties below £500,000 rateable value, and no penalty for sites above it. This, it says, is necessary if annual wage floors keep rising at speed.

JD Wetherspoon has previously put numbers on the cumulative effect, estimating that minimum-pay rises plus National Insurance changes have added around £60 million a year to its costs. Smaller independents, including many fish and chip shops, have less scale to offset such increases.  

Outlook

The government’s push towards a single adult wage rate signals that further convergence is likely, not a one-off. For hospitality and fish and chip operators, the April 2026 rise is therefore both an immediate cost event and a marker of direction.

How shops respond will depend on local competition, customer tolerance for price changes, and whether the Budget offers counter-balancing relief on taxes or rates. What is clear is that minimum wage policy is becoming one of the defining forces shaping staffing, pricing, and investment decisions across the sector.