As we step into 2026, several policy changes outlined in the recent budget will significantly impact the Quick Service Restaurant (QSR) sector. From business rates to labour costs, here’s what operators need to know—and how to prepare.
Business Rates Reform (Effective April 2026)
The government has announced new national and sector-specific multipliers, including a high-value band for properties with a rateable value above £500k. While multipliers have been cut by 5p, revaluation uplifts (around +14% for restaurants) mean bills could still rise. Operators should start modelling bills site-by-site, prioritising locations under £500k RV, renegotiating leases where possible, and planning cash flow for transitional relief caps.
National Living Wage Increase (April 2026)
New rates will push wages up across all age bands, with the biggest jump for younger workers. For QSRs, this means higher labour costs and pressure on youth hiring. Businesses will need to redesign rotas to optimise staffing, boost sales per labour hour through kiosks and automation, and review pay bands alongside menu pricing adjustments to maintain margins.
Capital Allowances
A new 40% First-Year Allowance (FYA) from January 2026 encourages investment in qualifying assets, while the Writing Down Allowance drops to 14% from April. This is an opportunity to map assets for FYA eligibility and prioritise energy-efficient and automation investments to offset capital expenditure.
Corporation Tax Penalties
Late filing penalties have doubled, increasing compliance risk for operators. To avoid costly mistakes, businesses should tighten compliance calendars and adopt digital close processes for greater accuracy and efficiency.
Energy Efficiency Scheme
Free energy and carbon audits are available for over 600 sites until March 2026, targeting £3m in savings. QSR operators can benefit by applying for audits and implementing quick wins like LED lighting, proper HVAC maintenance, and insulation improvements to reduce operating costs.
Consumer Demand Outlook
With fiscal drag and frozen thresholds, price sensitivity will persist. Expect muted growth and deal-seeking behaviour. Strengthening value perception through loyalty programs, value bundles, and daypart promotions will be key to retaining customers.
Final Thoughts
The QSR sector faces a mix of challenges and opportunities in 2026. Rising costs demand smarter operations, while incentives for energy efficiency and capital investment offer room for growth. Operators who plan ahead—optimising labour, leveraging tax reliefs, and enhancing customer value—will be best positioned to thrive.