Over the past three years, Prague has experienced a true beauty boom. Every second basement space in both the city center and residential neighborhoods has turned into a cute nail bar, a cozy beauty salon, or a lash extension studio.

And we, as people who work daily with the internal market, can confirm that over the past year an extraordinary number of owners have approached us looking to urgently sell their salons and manicure studios.

What began as a golden era for entrepreneurs is turning into a “burst bubble”.
So what went wrong? Why is a business that, by all the rules of a major city, should be thriving now collapsing?

According to statistics, there are currently around 4,576 beauty salons operating in the Czech Republic.

At the same time, the market is experiencing a wave of bankruptcies and business closures. Since the beginning of 2025, there has been a sharp increase in the number of entrepreneurs declaring personal or business bankruptcy.

Statistics also show that 2025 is shaping up to be one of the strongest years in terms of the number of bankruptcies among entrepreneurs over the past several years.

This means that many people who opened salons as a “quick business” during the beauty boom are unable to withstand the financial pressure.

Reasons:

The Illusion of Easy Money vs. Market Saturation

Many entrepreneurs, especially expats, arrive with business experience from countries where regular salon visits are considered a normal part of life and social etiquette.

The Czech market has become flooded with offers. Competition is reaching extreme levels. This reduces margins, forcing owners to lower prices or offer discounts simply to fill capacity, often at the expense of quality and profitability.

Marketing, service quality, and a unique value proposition all require significant investment — costs that newcomers often fail to anticipate.

The Phenomenon of a “Conservative Czech Audience”

Perhaps the most underestimated factor. Czechs are pragmatic and highly conservative in their beauty habits. Many local women prefer home care, and visits to hairdressers or manicure salons often occur less than once a month.

This is compounded by the overall economic situation in the country. Inflation and rising prices for food and utilities mean that beauty services are among the first expenses consumers cut during periods of financial restraint. Relying on the local market often does not pay off.

The Tax Trap and VAT (DPH)

The most painful issue for small beauty businesses is taxation, particularly value-added tax (VAT). The Czech system sets a clear turnover threshold of CZK 2,000,000 over any 12 consecutive months.

For a small salon, this figure is entirely achievable. However, once it is exceeded, the business is required to register as a VAT payer. This results in an immediate 21% increase in service prices (if margins are maintained) or a critical drop in profit when trying to keep prices competitive with non-VAT payers.

This system forces many businesses to operate on the edge, split operations, or move into the “gray zone”, which carries significant long-term risks.

Legal businesses face high operating costs, including staff salaries (up to 40% of expenses), rent, and taxes, making long-term sustainability increasingly difficult.

Conclusion: Expectations Do Not Match Reality

The Czech Republic of 2025, with its tax burden, intense competition, cultural specifics, and economic pressure, shows that the market no longer tolerates lightweight business models.

Salons built on expectations of high margins and a constant flow of random clients are proving to be vulnerable.

The “bubble” is bursting. The market is self-regulating in a painful but natural way.

Those who survive will be the ones who offer experience, quality, and clear value to the customer.

The time of professionalism, precise business models, and strategic planning has arrived.