Trading slows after summer, but productivity remains resilient.

September marked a return to more typical trading conditions following the summer period, with operators across much of the hospitality sector experiencing softer demand and increased pressure on efficiency, according to the latest Hospitality Sector Index from Moore Kingston Smith.

While revenue performance was mixed, a consistent theme emerged across the market: businesses are continuing to focus on labour productivity, operational discipline and more strategic workforce management. As cost pressures continue to shape decision-making, the ability to generate greater value from each labour hour remains a critical measure of resilience and long-term sustainability.

Industry snapshot

The broader hospitality market continues to reflect many of the themes emerging from this month’s Index.

Broader market indicators continue to suggest consumers remain willing to spend on hospitality experiences but are becoming increasingly selective about where and how they spend their money.

Value, quality and experience continue to influence purchasing decisions, with operators that can clearly differentiate their offer. This is increasing the importance of a clearly differentiated offer and a compelling value proposition.

At the same time, businesses continue to grapple with rising employment costs, inflationary pressures and ongoing employment law reforms. As a result, productivity, workforce planning and operational efficiency are increasingly important boardroom priorities.

London and destination markets continue to benefit from tourism, corporate activity and experience-led spending, while regional operators face a more competitive environment and heightened consumer caution.

Across all sectors, one message is becoming increasingly clear: sustainable business performance is no longer driven solely by revenue growth. The ability to attract, retain and effectively deploy talent is becoming an equally important driver of commercial success.

Fine dining, casual dining and pubs –September 2026

Fine dining

Fine dining continued to be the strongest-performing restaurant segment on an annual basis.

Although revenue declined by 1.74% compared with August, the reduction appears relatively modest against a backdrop of seasonal softening. Labour hours increased by just 0.73%, resulting in a 2.46% decline in Revenue per Labour Hour on a month-on-month basis.

The movement in labour hours indicates that operators retained their staffing capacity despite the modest reduction in sales. Premium restaurants often require a consistent level of front-of-house and kitchen coverage to maintain service standards, which can limit the scope for immediate labour adjustments when demand fluctuates.

The longer-term picture remains highly encouraging. Revenue increased by 5.74% compared with September 2025, while labour hours reduced by 6.06%, driving a significant 12.56% increase in Revenue per Labour Hour. This represents the strongest annual productivity improvement across all restaurant categories.

Central London remained a key contributor to growth, recording revenue growth of 8.70% year-on-year. The results suggest continued demand for premium dining experiences and occasion-led visits, despite wider economic pressures.

The performance also reinforces the strength of businesses that have successfully positioned themselves around quality, service and experience rather than competing solely on price.

Casual dining

Casual dining operators faced a more difficult September.

Revenue declined by 8.29% compared with August, while labour hours fell by 4.17%, resulting in a 4.29% decline in Revenue per Labour Hour.

The most pronounced regional movement within casual dining was recorded outside London, where revenue fell by 13.55% month-on-month. These results highlight the continuing sensitivity of mainstream dining to shifts in consumer confidence and discretionary spending.

Competition within the segment remains intense. Customers are increasingly weighing value, convenience and experience when deciding where to spend, creating ongoing pressure for operators to deliver compelling offers whilst carefully managing costs.

Despite these challenges, annual productivity improved. Revenue was 4.44% lower than September 2025, but labour hours reduced by a greater margin of 6.24%, resulting in a 1.92% increase in Revenue per Labour Hour.

This suggests many operators have adjusted their operating models and workforce deployment strategies in response to continued economic pressure.

Pubs and bars

Pubs and bars were the strongest performers on a month-on-month basis and the only restaurant category to achieve revenue growth in September.

Revenue increased by 1.98%, while labour hours rose by just 0.52%, resulting in a 1.46% improvement in Revenue per Labour Hour.

Central London delivered particularly impressive results, with revenue increasing by 41.88% compared with August. The increase coincided with the return of office workers and business activity following the summer holiday period, which may have supported demand across the capital.

Year-on-year performance remained relatively stable overall, although South East London achieved particularly strong growth, recording a 31.65% increase in revenue.

The results demonstrate the continued resilience of the pub sector, particularly where venues maintain strong local relevance and create compelling social experiences that encourage repeat visits.

Hotels – August 2026*

 *The hotel data reflects a period one month earlier than the restaurant data due to an industry reporting lag.

The latest available hotel data, which relates to August, reflects the challenges of managing labour-intensive operations during periods of fluctuating demand.

Revenue decreased by 15.16% compared with July, whilst labour hours reduced by 3.05%, leading to a 12.49% decline in Revenue per Labour Hour.

Hotels operate with a relatively fixed staffing base across reception, housekeeping, maintenance and food and beverage functions, limiting their ability to adjust labour costs at the same pace as changes in occupancy.

The annual position, however, presents a more positive picture. Revenue was only 0.83% lower than August 2025, whilst labour hours decreased by 3.44%, resulting in a 2.71% improvement in Revenue per Labour Hour.

These figures suggest that many hotel operators continue to make meaningful progress in improving workforce efficiency despite a challenging trading environment.

People & workforce outlook

Perhaps the most important story emerging from this month’s data is not revenue performance alone, but the continued focus on productivity.

Across almost every category, businesses are becoming more efficient in how they deploy labour. In a sector facing rising employment costs, increased compliance obligations and continuing pressure on margins, this matters more than ever.

Importantly, the data indicates that productivity improvements are not solely the result of reducing labour hours. Instead, many operators appear to be focusing on better workforce planning, stronger management capability, improved scheduling practices and greater operational discipline.

As hospitality employers prepare for further employment law reforms and navigate an increasingly complex employment landscape, people management is becoming a strategic business capability rather than simply an HR function.

The organisations that invest in leadership capability, employee engagement, retention and workforce planning are likely to be better positioned to deliver productivity improvements whilst protecting guest experience.

In an industry built on service, hospitality’s long-term competitive advantage remains people. Creating an environment in which employees can perform at their best can support operational efficiency, service quality and longer-term commercial performance.

Looking ahead

The final quarter of the year represents one of the most important trading periods for the hospitality sector.

Christmas bookings, corporate events and seasonal demand will provide significant opportunities for growth, but operators will continue to navigate ongoing cost pressures and cautious consumer sentiment.

September’s results suggest that, while market conditions remain challenging, many operators are adapting successfully. As the sector moves through the critical final quarter, the ability to combine commercial discipline with strong leadership, effective workforce planning and a relentless focus on guest experience will remain central to sustainable performance.