OakNorth’s latest Hospitality & Leisure Sector Pulse, which covers the six months to 31 October 2025, highlights a divided picture across pubs and bars.
Community and destination pubs performed well through the summer months, benefiting from events such as Wimbledon, the Women’s Euros and international cricket.
However, city-centre bars struggled with weak mid-week and late-night trade, alongside higher rent and energy overheads.
OakNorth notes that late-night venues remain particularly exposed as safety concerns, cost inflation and reduced nighttime footfall weigh on performance.
‘Solid’ festive trading
Looking ahead, OakNorth expects pubs to deliver a “solid festive period”, supported by Christmas gatherings and major winter sport including the men’s Ashes in Australia. But operators will continue to face pressure from energy costs, inflation and a ceiling on how far drink prices can rise without impacting demand.
The report predicts that urban pubs could see improvement as employers introduce partial return to office mandates in early 2026, though this is not expected to fully offset late-night softness.
Pubs are also likely to continue premiumising “within value frameworks”, focusing on local provenance and craft-led offers rather than broad price increases.
Consumer caution persists
OakNorth reports that value-led behaviour remains dominant, with consumers prioritising affordability even as sentiment improves slightly following Bank of England rate cuts. This trend is expected to continue into 2026, reinforcing the need for tactical pricing and tight cost control across the sector.
Large operators, including Marston’s and Stonegate, accelerated investment in automation, AI and digital tools to offset wage inflation and protect margins. These include demand forecasting, dynamic staffing and self-service technologies, with OakNorth noting that tech adoption is becoming “essential” for margin protection across pub estates.
While capital remains available for well-branded, operationally disciplined operators, secondary sites continue to experience pricing pressure due to cost uncertainty. Investors remain selective, favouring energy-efficient and operationally resilient pub assets.
Overall, OakNorth says that while pubs have shown strong adaptability and remain vital community hubs, the next six months will require tight cost management, selective premiumisation and flexible staffing strategies as operators navigate inflation, a tighter spending environment and shifting demand patterns.
