The tables are full. The margins are empty.
The Dutch hospitality sector entered February with a deceptive sense of normalcy. Terraces in Amsterdam and Utrecht are crowded. Booking platforms report steady volume. Yet the underlying financial architecture of the industry is fracturing under the weight of structural cost shifts. A recent assessment by ING Economics suggests a year of modest portions rather than a feast. This is not a cyclical dip. It is a fundamental repricing of service and leisure in the Netherlands.
Labor costs are the new gravity
Wages have decoupled from productivity. The Dutch government implemented aggressive minimum wage hikes throughout 2024 and 2025 to combat the cost of living crisis. While these measures supported consumer demand, they created a permanent floor for operational expenses that many small to medium enterprises cannot sustain. Hospitality is labor intensive. There is no software patch for a sous-chef or a server. Data from Reuters indicates that Eurozone labor tightness remains a primary driver of services inflation. In the Netherlands, the vacancy rate in the hospitality sector remains 15 percent higher than the pre-pandemic average. Owners are paying more for less experienced staff. This is the definition of a margin squeeze. Revenue is rising by 2.4 percent while labor costs are climbing by 4.8 percent. The math does not work.
The consumer is exhausted
Spending is not exuberant. It is defensive. The post-pandemic revenge spending era has officially ended. Households are now facing the reality of higher for longer interest rates. Mortgage renewals are eating into discretionary income. When people go out, they are tactical. They order one less drink. They skip the appetizer. They choose the ‘daghap’ over the à la carte menu. This shift in behavior is reflected in the volume of transactions versus the value per transaction. Volume is stagnant. Value is only rising because of price pass-through. If prices rise further, the volume will drop. The industry is walking a tightrope between insolvency and pricing itself out of the market.
Visualizing the Margin Gap
The following chart illustrates the divergence between gross revenue and net profit margins across the Dutch service sector as of February 15.
Energy volatility remains a ghost in the machine
Natural gas prices have stabilized compared to the 2022-2023 shock. However, the structural cost of energy in the Netherlands remains significantly higher than the ten year average. Hospitality businesses are locked into contracts that reflect this new reality. Commercial real estate is also undergoing a slow motion correction. Landlords are resisting rent reductions despite the declining profitability of their tenants. This creates a standoff. We are seeing an increase in ‘zombie’ cafes. These are businesses that generate enough cash to pay interest and wages but nothing for maintenance or reinvestment. They are one broken industrial refrigerator away from bankruptcy.
Comparative Sector Performance
The impact is not uniform across all sub-sectors. High-end dining and budget fast-casual are outperforming the middle market. The ‘squeezed middle’ is where the most significant failures are expected to occur this year.
| Sector Segment | Revenue Growth (Est.) | Margin Pressure | Risk Level |
|---|---|---|---|
| Luxury Hotels | +5.2% | Moderate | Low |
| Mid-Range Restaurants | +1.1% | Severe | High |
| Fast Casual / Takeaway | +4.4% | Low | Medium |
| Traditional Cafes | -0.5% | Extreme | Critical |
The bankruptcy pipeline is filling
According to data from Bloomberg, corporate insolvencies in the Benelux region have trended upward for four consecutive quarters. The hospitality sector leads this trend. During the pandemic, the Dutch state provided billions in support. That debt is now being called in. The Tax Administration (Belastingdienst) has ended its leniency period. Thousands of hospitality entrepreneurs are currently repaying tax debts while simultaneously facing higher operating costs. It is a pincer movement. The ‘modest portions’ mentioned by ING are not just on the plates. They are in the bank accounts of the owners.
Technological disruption is the only escape
Survival now depends on automation. We are seeing a surge in investment in self-service kiosks and automated kitchen management systems. This is not about innovation. It is about survival. If a business can reduce its front-of-house staff by 20 percent, it might stay solvent. Technology is the only lever left to pull. The Dutch hospitality industry is being forced to choose between becoming a high-priced luxury service or a low-labor automated utility. The middle ground is disappearing.
Investors should monitor the March 2026 Dutch Central Bank (DNB) report on small business credit conditions. If credit tightens further, the ‘cautiously positive’ outlook will evaporate. The specific data point to watch is the 90-day delinquency rate for hospitality VAT payments. This will be the first clear signal of the coming shakeout.
