UK pub market strong despite cost squeeze
Independent operators are driving innovation in the UK hospitality sector, as pubs and restaurants continue to attract investment despite inflation, staffing shortages and sky-high energy costs, according to a new market review by Christie & Co.
The UK hospitality industry continues to attract strong investor interest despite ongoing economic challenges, according to a new report from specialist business property adviser Christie & Co.
The Pubs & Restaurants Market Review revealed that, while rising costs, energy prices, staffing shortages and declining profits weigh heavily on the sector – with the June spending review leaving little to celebrate – demand for new site acquisitions remains robust, particularly from independent buyers.
Stephen Owens, managing director of pubs and restaurants at Christie & Co, said the report “highlights the sector’s enduring appeal and adaptability in the face of significant ongoing pressures”.
“Pubs and restaurants are continuing to attract strong interest, particularly those that are well-positioned, competitively priced, and capable of diversifying income streams,” he added.
Independent buyers lead activity
The market remains polarised with strong demand for assets under £600,000 and at the prime end of the market. Notably, there has been a shift in interest from food-led establishments to wet-led pubs, which tend to offer higher profit margins amid escalating food production costs.
The tenanted and leased sector model has seen the number of outlets continue to fall, as the bigger pub groups focus on their managed and managed operator (franchised) models.
Pubcos were particularly active in the first half of 2025, the report noted, both in acquiring new properties and streamlining their portfolios. Larger operators are moving away from the traditional tenanted and leased models, focusing instead on managed and franchised formats.
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Meanwhile, the independent sector continues to dominate, representing the buyer in 65% of deals agreed by Christie & Co this year. For Owen, this allowed for confidence in the sector’s long-term viability.
Furthermore, around 86% of pubs sold this year are set to continue trading as pubs, further underlining the sector’s resilience, according to the adviser.
Accommodation and experience drive demand
A key growth area has been pubs with letting rooms. These venues are attracting increasing interest as operators seek to diversify their revenue streams. Lifestyle-led businesses in popular tourist spots, or ‘honeypot’ locations, are also proving resilient.
Despite slower activity in major cities outside of London, the capital and South East England are experiencing a resurgence in demand.
Owens pointed to a clear shift toward wet-led models and increasing demand for venues with accommodation, as operators look to broaden their offerings and improve profitability.
Changing consumer tastes
The report also highlighted evolving consumer behaviour, including growing demand for low and no-alcohol drinks and venues that offer a unique, experience-led environment. Operators are responding by placing greater emphasis on atmosphere, events and service quality.
The tenanted and leased sector model has seen the number of outlets continue to drop, as the bigger pub groups focus on their managed and managed operator (franchised) models.
The report added that the independent sector is the dominant model where innovation and entrepreneurship was most likely. It credited this as “a sign of a healthy sector overall”.
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