Waiting for VAT reform? How hospitality procurement can improve profitability now
Executive summary
Hospitality operators face continued pressure from rising labour costs, food inflation, and operating expenses. While VAT reform remains uncertain, procurement optimisation can help improve spend visibility, supplier performance, operational efficiency and profitability today.
Key takeaways
Benchmark your current purchasing prices
Review supplier agreements and commercial terms
Improve spend visibility across purchasing categories
Consolidate suppliers where appropriate
Leverage procurement technology for greater control
Identify hidden cost leakage and inefficiencies
Margins are under pressure, costs continue to rise, and hospitality operators are being asked to do more with less.
Across the UK, hotels, restaurants, pubs and leisure venues are managing higher wages, increased National Insurance contributions, business rates and ongoing food inflation, while continuing to deliver the high-quality experiences guests expect.
Against this backdrop, the hospitality industry continues to campaign for a reduction in VAT from 20% to 10%, bringing the UK more closely in line with many European markets.
At this stage, however, a wider 10% hospitality VAT rate remains an industry campaign rather than confirmed Government policy, with no agreed implementation date.
What has been confirmed is a temporary 5% VAT rate for eligible children's meals and certain family attractions from 25 June to 1 September 2026.
While any support for the sector is welcome, most hospitality operators cannot afford to wait for future policy changes.
Take action now with a smarter procurement strategy
The reality is simple. Some things are outside your control; your procurement strategy isn't one of them.
Every day, hospitality operators make hundreds of purchasing decisions that directly impact profitability, operational efficiency and guest satisfaction. Yet many businesses don’t have time to benchmark their spend, review supplier performance or explore whether better commercial terms are available.
That's where the right procurement partner can make a significant difference. At Avendra International, we work with hospitality businesses of all sizes, from independent operators to large multi-site groups. We understand the challenges you face because we work alongside hospitality operators every day.
Our role is not simply to reduce costs.
It's to help operators build stronger, more efficient and more profitable businesses.
Where procurement can deliver immediate value
A procurement review can often uncover opportunities in areas such as:
Supplier negotiations and improved commercial terms
Food, beverage and non-food purchasing efficiencies
Product alternatives that maintain quality while reducing costs
Menu and category optimisation to protect margins
Supplier consolidation to reduce administration and complexity
Procurement technology that improves visibility and control
Waste reduction and identification of hidden cost leakage
For many operators, the savings can be significant. Equally important is the time that can be given back to operational teams.
Less time spent managing suppliers, chasing pricing issues and processing paperwork means more time focused on employees, guests and growing the business.
Start with a procurement benchmark review
One of the easiest ways to understand the opportunity within your business is through a procurement benchmark review.
Our specialists compare your current purchasing arrangements against market opportunities, helping identify where savings, efficiencies and operational improvements may exist.
In many cases, operators are surprised by how much value can be unlocked without compromising quality or service.
Supporting hospitality operators through cost and margin pressures
The hospitality sector has always been resilient.
While the industry continues its campaign for VAT reform, operators still need practical ways to protect profitability today.
Whether you operate a hotel, restaurant, pub, leisure venue or hospitality group, Avendra International can help you gain greater control over purchasing spend, improve operational efficiency and unlock long-term value.
Discover how our hospitality procurement specialists can help your business do more with less – contact us at hello_UK@avendra.com
FAQs
How can hospitality businesses reduce costs without affecting guest experience?
Hospitality businesses can reduce costs through procurement benchmarking, supplier negotiations, product rationalisation and improved purchasing controls while maintaining quality standards.
What is a procurement benchmark review?
A purchasing benchmark review compares what hospitality operators are currently buying - including product specification, pack size, volume and usage against comparable market pricing and commercial opportunities to identify realistic savings without compromising quality or service.
How does procurement improve operational efficiency?
Procurement improves operational efficiency by reducing supplier complexity, increasing spend visibility, streamlining purchasing processes and reducing administrative workload.
What procurement categories offer the biggest savings opportunities for hospitality operators?
Common areas include food and beverage procurement, utilities and energy procurement, cleaning supplies, consumables, facilities management services and non-food purchasing categories.
Why is supplier management important in hospitality procurement?
Strong supplier management helps maintain service standards, improve contract performance, reduce supply risk and ensure operators achieve the best commercial value.
