Tackling the biggest challenges in hospitality procurement in 2024 

It’s something we see a lot here at Access, customers come to us having identified areas of the business that are costing time and money and they’re looking for solutions. Our procurement specialist product teams have plenty of experience in supporting hospitality businesses. From 90% time saving on accountancy tasks to an average of 1.5% credit capture and a 4% reduction in waste – our customers report significant savings soon after implementation.   

In this article, we’ll look at some of the biggest challenges impacting food and beverage procurement in the UK in 2024 as well as strategies for navigating your way through them successfully.  

What is food and beverage procurement? 

The purchasing of food and beverage products for businesses that serve customers is known as procurement. Procurement is the sourcing and purchasing of products and services for businesses. While procurement can extend to equipment, services, and other products for all businesses, for hospitality service businesses such as restaurants, bars, and pubs food and beverage procurement is the primary concern.   

The food and beverage procurement process extends beyond purchasing food and drink items. Building relationships and securing rates with suppliers is critically important, sourcing reliable suppliers of quality yet budget-friendly items takes time and research.   

The impact of inefficient procurement processes can mean higher costs for items, supply chain issues that affect service, erroneous food waste, and even the profitability of your menu items.   

11 food & beverage procurement challenges and how to tackle them 

There are several key factors that influence the landscape of food and beverage procurement and while many are out of our control, there’s plenty you can do to mitigate risk in your business as well as reduce costs.   

Below are the main challenges likely to impact food and beverage procurement in the UK and Ireland in 2024.   

1. Supply chain issues 

Unexpected supply chain issues with no contingency plan in place can lead to significant problems for hospitality operators with the potential to shut down operations or even cause a PR headache if, for example, your business that sells primarily chicken – runs out of chicken.   

The first step in mitigating impact is to be aware of the potential risk. The world feels like an increasingly volatile place and global events can heavily influence the supply chain. Environmental and weather-related disasters can have a surprising impact on the supply chain when impacted countries are forced to suddenly halt international transit or focus efforts inward. Look at the impact of global events and poor weather on the global rice shortage which can in turn influence prices. Depending on your business model, different products will have varying impacts, so it’s important to know about the global influences that could impact your business.   

Geopolitical tensions also have an impact on local supply chains. The ongoing conflict in Ukraine has seen transport affected, leading to food shortages and inflation around the world. Similarly, the Israel-Hamas conflict is affecting agricultural activities and logistics that could lead to yet more food shortages.  

The last couple of years have also seen an increase in trade union-led disputes with strikes affecting many transport and logistics lines, with strike action in place for some local rail and airports.   

But what can be done to mitigate the risk of economic and political events? Contingency planning is essential. Supply chain mapping is a crucial step, so you understand what factors are likely to impact your business.  To protect your supply chain, you might consider dual sourcing to lessen the dependence on one supplier. Choosing locally produced and supplied produce can also help but can come with increased costs. As an operator, your job will be to assess potential risk and contingency plans based on the level of threat to business operations.   

2. Sustainability reporting 

It has been reported that the agri-food industry is thought to be responsible for around a quarter of global greenhouse gas emissions and there are a number of directives being implemented across the world that demonstrate how the food and beverage procurement landscape might be affected. European policymakers are developing a number of new directives that will impact sustainability reporting for medium and large enterprises such as the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). Similarly, Scope 3 emissions are set to be under scrutiny under EU directives. And despite Brexit, businesses that operate across Europe will be required to comply.  In the UK, the Net Zero Roadmap outlines a target to remove all avoidable emissions across supply chains and credibly offset the remaining emissions to achieve net zero by 2040.  

In addition, the continuing focus on reducing plastic pollution has seen a ban on a range of single-use plastics that will impact hospitality procurement and possibly impact supplier choice and budgets for food and beverage products.  

In conclusion, it looks like businesses are going to be required to take more accountability in the measuring and reporting of their sustainable business practices. To mitigate this risk, early action is key. An audit of current sustainability reporting and measurement can flag any areas of risk, such as high food waste or again, supply chain issues that could be a problem. As and when directives come into force, this can cause a scramble to find a solution for reporting and measuring, so operators who act early will have more time to assess their options and choose software or other measures that provide wider business benefits as well.   

3. Sourcing suppliers  

Building and maintaining strong relationships with suppliers is an important part of food and beverage procurement and managing supplier sourcing can be a time-consuming task. When we talk to operators, we usually ask them what information about their suppliers they can access and how long would it take them to do so. Many operators have poor visibility of their suppliers, being unable to quickly ascertain an up-to-date list of active suppliers, how many unique products are being purchased across the estate, how many of these products are duplicated and supplied from alternative suppliers, and the true spend of each product line. This lack of visibility can leave operators vulnerable, not just to expensive procurement but also to whether their suppliers comply with regulatory requirements or the quality and ethical standards of their suppliers. With accountability across areas such as sustainability and allergen compliance a hot topic, operators should look to increase the visibility of their suppliers. Establishing clear guidelines for adding new suppliers and specifying the criteria for selection and approval is a good place to start, but centralising supplier management to prevent duplication and maintain consistency across the business is a prudent solution. Regularly monitoring supplier usage to identify instances of unnecessary duplication or excessive reliance on a particular supplier will help to make your business less vulnerable. This kind of visibility can be difficult to achieve without procurement software to keep everything in one place but means that once in place, guidelines and processes are much easier to maintain.   

4. Cost fluctuations  

Food and beverage procurement isn’t the kind of thing that you can set up once and then leave to it, the changeable landscape of hospitality means that you’ll always need to keep a close eye on the market and be ready to be agile when it comes to procurement. Fluctuating prices of ingredients can make menu costing exercises a challenge, as inflation on specific products can vastly impact the profitability of a menu item. Market prices from different suppliers also need to be monitored to ensure that you’re securing the best prices. A price increase from your current supplier may well be in line with market fluctuations and you’ll have to wait it out or make menu adjustments. Additionally, when suppliers are offering pricing against your required products, be sure to check that the supplier doesn’t swap out for their own brand or lesser quality to match or reduce pricing. Securing pricing through sole suppliers can help you get the best rates but can make you more vulnerable to the aforementioned supply chain issues. We encourage our customers to ask some key questions to suppliers before the contract, such as:   

• What is the contracted period of pricing? 
• Is the pricing locked or variable?   
• What service agreement is in place?  
• Are minimum orders applicable?  
• Who is the main point of contact post agreement?  
• Which platform will be used to place orders?  
• Will Allergen details be provided for food products?

5. Quality control 

With so much to consider when sourcing and managing suppliers, it’s imperative that quality doesn’t fall by the wayside. Price isn’t the only factor when choosing suppliers or products but also the level of quality is going to naturally impact the cost price to customers, so it’s a delicate balancing act. Poor quality purchasing might happen when there is a sense of urgency, and employees feel they have no choice but to avoid delays in a lengthy approval process. Again, identifying and approving additional suppliers can be a helpful strategy, allowing you to maintain flexibility if you need to switch suppliers quickly.   

Another helpful strategy is to keep an eye on customer feedback and reviews. This can tell you a lot about how your offer is being received and if you see a pattern of feedback that targets the quality of your food, then it might be time to review suppliers.   

6. Seasonality  

Seasonal procurement practices can align nicely with sustainability goals by supporting local farmers and reducing the carbon footprint associated with long-distance transportation. However, balancing sustainability with consistent supply and quality can be challenging for hospitality operators. For one, multi-site operators might have vastly different local offerings affecting price and sustainability on a site-by-site basis. In addition, a seasonal produce approach in places like the UK can mean fewer options for your menu planning, as well as consistency due to poor weather impacting harvest or other issues elsewhere in the supply chain. In 2023 adverse weather affected the supply of cucumbers, tomatoes, and potatoes, and a drop in production this year anticipates a possible shortage of cucumbers. Or simply having to change your menu throughout the year based on seasonality. The right suppliers can make all the difference, especially if they are themselves willing to prioritise sustainable business practices. Having a diverse menu can help over-reliance on certain items should they be affected by any supply issues, but on the downside, this is a more costly approach to menu planning.   

7. Regulatory compliance  

The hospitality sector is subject to a wide range of regulations covering areas such as food safety, food labelling requirements, and allergen control. Following some recent high-profile cases of allergen-related incidents in establishments, operators should proceed with caution. Ultimately, if supplier error causes an issue with food labelling, it is the customers and businesses who will suffer the worst consequences. For businesses with multiple suppliers, doing your due diligence can become a time-consuming task. As outlined above, guidelines for new suppliers can help you to gain this visibility. Ask the question – how can I view allergen information? What are the safeguarding processes that ensure I can have confidence in my products?   

8. Food waste  

We’ve talked a lot about sustainability and part of that conversation is food waste. Various initiatives are shining a spotlight on food waste, with the rise of companies such as TooGoodToGo – who actively promote selling off food that might otherwise be wasted, consumers are increasingly asking businesses to do more to reduce unnecessary food waste. And it’s not just an ethical standpoint, there’s a huge cost saving to be made for businesses. Monitoring, recording, and reporting on food waste from your kitchens is important. That includes produce that has gone out of date. If your business is seeing a lot of waste in this area and it’s not an internal problem, you might look to suppliers for issues – are expiration dates too short? Are deliveries too frequent or too large?   

9. Order processing  

Manual order processing can be an extremely time-consuming and inefficient task for food and beverage operators with purchase orders, invoices, and payment details having to be manually inputted into paper-based or spreadsheet systems that are prone to mistakes and errors in accountancy. Additionally, paper-based systems take up a lot of space, making it difficult to manage and retrieve information when needed. With so many businesses now utlising e-purchase orders and digital records, businesses that haven’t caught up yet risk being left behind. With much slower processing and payments, building those crucial relationships with suppliers becomes more difficult. Teams that are using too much time managing admin over being in the kitchen may become frustrated and leave you to work elsewhere. For businesses that have yet to digitise their processes, we recommend making 2024 the year to make the switch. As well as the immense time savings, digital records help build an accurate audit trial when it comes to fulfilling your compliance obligations.   

10. Consumer trends  

Evolving consumer trends and preferences continue to influence food and beverage procurement. New food and drink trends can cause fluctuations in the market through higher demand for specific items or simply mean that changes to your menu will require starting from scratch with suppliers. Similarly, when customers are tightening their belts – it can mean that they are more concerned with value, and that means keeping your costs and menu prices lower. Keeping up to date with consumer trends enables you to stay ahead of the game.   

So, what should you look out for in 2024? According to CGA’s Reputation Survey, the cost of living crisis is still influencing consumers’ hunger for out-of-home dining, with 65% of British consumers worried about price hikes when dining out and 77% seeing value for money as being imperative when choosing somewhere to eat. Operators should analyse their own sales data closely to see if these trends are coming to fruition in their venues. Are customers opting for cheaper menu items? Are they ordering less? Has AOV lowered? Asking these questions regularly will help you stay on top of your customers’ spending behaviours.   

And it’s not just the economy that can influence your menu, food and drink trends can make a big impact on your menu and therefore your suppliers and prices. Restaurant recently reported on some of the big food and drink trends set to influence 2024 and we looked at the ones that could impact food and beverage procurement. Restaurant reports that the vegan boom that was predicted hasn’t quite taken hold as anticipated, seeing several vegan-offering operators reduce their venues or exit the market completely, many will likely move towards a mixed concept to broaden their audiences. It will depend on your offering and style whether this is likely to impact your food and beverage sales, those with a heavy emphasis on veganism may well review their menus requiring new suppliers. The report also highlights the continued rise in popularity of Middle Eastern food which may influence more Middle Eastern offerings entering the market or operators adding more Middle Eastern inspired dishes to their menu, in which case we would direct you back to the supply chain issues mentioned earlier and ensure you can protect your business offering in the event of problems.   

When consumers do decide to dine out, they are increasingly more aware of what they are eating and drinking, its provenance, and the impact of their choices on a local and global scale. In the Bidfood 2024 Food and Drink Trends Report, two in three adults reported that it was important to them to make healthy eating choices when dining out of home and 30% stated that they paid more attention to the ingredients list. Nutritional value and the quality of food are of increasing importance in a general way and once again, your data will reveal whether these trends are reflected in your customers' choices. Similarly, with sustainability on everyone’s mind and the increasing importance of supporting local businesses, 76% found dishes with UK provenance more appealing.  

11. Competition 

Despite challenges the UK Hospitality Industry is expected to grow over the next few years from USD 24.81 billion in 2024 to USD 28.11 billion by 2029. After a significant contraction of the market due to COVID and the impact of Brexit, investment in the hospitality sector has started to grow again, with investment in hotels expected due to increased tourism to the UK. A thriving market is also a competitive one and increased competition could impact food and beverage procurement for operators.   

With more businesses competing for the same pool of suppliers, shortages of key ingredients and products can be more likely to occur, especially during peak periods of demand such as Christmas potentially impacting revenue during the busiest times of the year for operators. High demand can also drive up prices unexpectedly, making it harder to plan menus and forecast issues. In a competitive market, larger or higher-paying clients often have an upper hand in securing large contracts that make suppliers priortise their business, compromising quality and consistency for smaller operators. It could also lead to a supplier-led environment, where suppliers can pick and choose who they work with, hindering operators' ability to negotiate competitive deals and reducing the number of suppliers to choose from. To mitigate these risks, operators should be able to be flexible and able to source alternative suppliers if needed. In this environment, those relationships with key suppliers become even more important. So, it’s wise to look ahead and contingency plan for the future. Investing in software now can make management of these challenges much easier to navigate when they do arise, so having a long-term view of the hospitality landscape is always a good idea.   

How can food and beverage procurement software help? 

Procurement software helps business operators manage the purchasing of products, goods, and services in relation to their business. For food and beverage-led business, hospitality procurement software can also provide tools for menu engineering to help build profitable menus, data reporting to improve bottom lines and identify trends, and offers a centralised platform in which to manage purchase orders, invoices, and accounts digitally in one place.   

Our own Procure Wizard software for hospitality businesses is currently used in more than 7,000 UK and Ireland-based venues helping to secure average customer savings of 5-10% on pricing, reduce food waste by 4%, and save as many as 5,000 working hours.  

How could food and beverage procurement software help you?  

• Better price alternatives and price comparisons 

Procure Wizard enables you to compare prices from different suppliers and negotiate better pricing terms. By sourcing cheaper alternatives to the same product in the market and checkout, our customers are able to make average savings of 5-10%. Putting this in perspective, a 2.5% saving on a £3million spend would equal £75,000.   

• Multiple invoice scanning and email PDF processing 

Our procurement software delivers all the tools you need to manage invoice admin, including full purchase ledger capabilities for non-food and beverage products, allowing for seamless management of all procurement needs. It streamlines accounting processes by enabling post-nominal codes against the ledger, eliminating the need for re-coding. The software provides robust analytics and reporting functionalities, facilitating the tracking of accruals and purchase receipts for enhanced financial management. Integrated workspace features further enhance reporting clarity, promoting efficient decision-making. Notably, one customer with 33 hotels reported significant savings of £185,000 through credits over 12 months after implementing the software. Additionally, the software resulted in remarkable time savings, with 5,000 working hours, equivalent to 625 days or 125 working weeks, saved within one year of installation.

• Menu management and recipe costing 

With so many factors necessitating agile and flexible menu management, procurement software can help you to manage your menus, cost your recipes and calculate your profit margins easily, as well as analyse your sales data to define your best, and worst, performing products.  

• Stock Control  

Benefit from the cost savings generated through an optimised stock control system that reduces food waste by 4% on average as well as enabling your teams to foresee stock shortages and act accordingly or identify areas of excess stock.  

• Allergen management and nutritional analysis  

As discussed earlier, allergen management is critical to the safety of your customers and the protection of your business’s reputation. Procurement software helps you to view allergen information directly from your approved suppliers.  

• Access EPoS integration  

Procure Wizard can integrate with Access EPoS to provide theoretical gross profit analysis based on real-time till data, enabling you to track, benchmark, and monitor performance and profitability. With advanced reporting that allows you to generate live sales and flash reports, you can make informed decisions quickly and manage budgets in line with revenue fluctuations. Our customers see significant increases in gross profit after implementation, with a recent customer reporting a 5% increase.  

• Accounts integration  

Integration with accounts systems allows users to automate the assignment of nominal codes and push data to accounting platforms upon delivery balance completion, reducing time spent on manual data entry by an average of 95%. For every £100,000 spent, Procure Wizard customers save £1,200, resulting in substantial cost savings. To put that into context, on a £3 million food and beverage spend this equates to savings of £36,000.   

• Supplier management  

Track accounts, manage approved suppliers, and obtain visibility over the entire estate in one easy-to-use platform, gaining greater accountability and record-keeping for auditing and compliance.      

Ready to face 2024? 

In this article, we’ve looked at some of the biggest challenges in food and beverage procurement for hospitality operators in 2024. While some of these are ongoing challenges that we’ve managed before, others are much more reactive to global developments that are harder to predict.   

What we do know is that forewarned is forearmed. Having a greater awareness of the possible challenges that could impact your business and putting measures into place to protect your operation is the best plan possible.   

Our specialist teams have years of experience working with customers to achieve all the impressive cost and time savings mentioned above but are always here to help you contingency plan, so when the worst does happen, you’re prepared.   

Talk to the team today about the next steps with Access Procure Wizard.