Japanese-style pubs, known as izakaya, are going bankrupt at a faster rate than during the COVID-19 pandemic, as consumers cut back on socializing expenses amid rising prices, according to a recent survey by a credit research firm.

From January to November this year, 203 izakaya operators went out of business, exceeding the 189 recorded for the whole of 2020, when the pandemic began to spread in Japan, Teikoku Databank Ltd. said.

Ongoing inflation is dealing a heavy blow to the industry, which had already been struggling with changes in consumer behavior following the pandemic, during which many people became accustomed to a lifestyle that does not involve going out at night.

Photo shows an izakaya worker closing the store in the Umeda district in Osaka on Nov. 27, 2020.(Kyodo)

And while consumers order fewer drinks due to shrinking disposable incomes, inflation is also forcing pub operators to pay more for materials, energy and labor, further squeezing their profit margins.

In fiscal 2023, around 40 percent of the izakaya operators surveyed reported losses, Teikoku Databank said, adding that if those with decreased profits were included, they would account for about 60 percent of all respondents.

Faced with such a predicament, some companies have started to diversify their revenue sources by expanding into different sectors, such as cafes and fast food restaurants.

In October, major Japanese-style pub operator Watami Co. announced that it has acquired the Japanese unit of the Subway sandwich chain, unveiling plans to expand its domestic outlets from fewer than 200 to over 3,000.