I think in a sense of "Hero's party is finished" is also considering that with conclusion of this battle, it could turns the narrative from "A Thief dragged down the Hero's Party, and got eliminated as deserved" to "Hero's party basically got carried by a thief, and without him, got beaten by a thief turned demon lord, also the warrior, and mage are basically beyond useless now"
And considering how human's side (especially where Hero's party from) treat other... won't be surprised if that also mean they would be seen as useless, and eliminated.
Edit: Oh yeah, forgot that the king, and advisor are basically no brain left now... yep... it's all over for "Hero's Party" and that kingdom.