How Do Hotels Reduce Food and Beverage Costs?

Hotels reduce food and beverage costs most durably by going after purchasing first, benchmarking and renegotiating what they pay suppliers across every outlet, then tightening menus, portions, and waste, all without cutting the quality guests notice. Because cost of goods is a large, controllable share of hotel F&B spend, even a few points off purchasing can move the department's profit margin more than chasing extra covers. The fastest way to build the buying leverage a single property cannot reach alone is managed procurement, the operator-favorable alternative to a group purchasing organization (GPO): a transparent agreed fee, no markup on spend, and 100% of rebates passed back to you, working with the distributors you already use.

Why are food and beverage costs so hard to control in hotels?

A hotel is not one kitchen. It is several F&B operations under one roof: restaurants and bars, room service, grab-and-go, and a banquet and catering business that can dwarf the rest, each with its own suppliers, specs, and order guides. That fragmentation is exactly why spend leaks. Pricing drifts outlet by outlet, off-contract substitutions slip through, and no one owns the contracts across the whole property, let alone across a portfolio.

It matters because purchasing is a meaningful, controllable line. In CBRE's analysis of 2,669 U.S. full-service, resort, and convention hotels, the cost of goods sold ran about 24.0% of hotel F&B department expenses (with labor the largest piece at 59.4%). You cannot easily renegotiate wages or rent overnight, but you can change what you pay suppliers, and that is the lever a hotel controls most directly.

Is now a good time to focus on F&B costs?

Yes, and the direction of travel supports it. In its most recent published half-year comparison, CBRE Hotels Research reported that F&B revenue per occupied room rose 3.8% in the first half of 2025, outpacing the 3.0% growth in total hotel revenue, and that F&B department profit margins improved from 28.7% in the first half of 2024 to 29.1% a year later. When a department is both growing and tightening its margins, every dollar taken out of the cost of goods drops almost straight to the bottom line.

"F&B revenue POR for the hotels in our survey sample increased by 3.8%." Robert Mandelbaum, Director of Research Information Services, CBRE Hotels Research

Where should a hotel look first to cut F&B costs?

Start where the money is. Most operators reach for the kitchen first, but the biggest and fastest savings usually live in what a hotel pays, not in how it cooks. In priority order:

• Benchmark and renegotiate contracted pricing across every outlet against the wider market, not just one distributor.
• Consolidate spend across outlets, and across properties in a portfolio, so the hotel buys with its true combined scale.
• Audit invoices line by line to catch off-contract substitutions and quiet price creep.
• Standardize recipes and buying specs across outlets so cost is predictable and portions are consistent.
• Engineer menus and banquet packages around contribution margin, promoting the high-margin items and re-costing the laggards.
• Control portions and track yield on high-cost proteins, where a few grams of drift per plate becomes real money across thousands of covers.
• Cut waste with par levels, FIFO rotation, and cross-utilization before ingredients expire.

Notice that cutting ingredient quality is not on the list. It is the one lever that almost always costs more in lost guests than it saves on the plate, which is why purchasing discipline, not cheaper food, is the durable path. The same playbook applies to a single restaurant, at a smaller scale.

How does buying across multiple outlets change the math?

Most hotels never leverage their true combined scale. Each outlet, and in a group each property, buys somewhat independently, so the operator negotiates as a series of small accounts instead of one large one. Pulling that volume into a single managed program is where the leverage comes from: the same spend, organized, suddenly negotiates like the large buyer it actually is.

That is the scale a managed procurement partner brings to the table. CORE Insights Group leverages more than $15B in purchasing volume across a catalog of 50,000+ cost-controlled items, backed by founders with 100+ years of combined procurement experience, so a hotel gets buying power it could not build alone while keeping full visibility into what it actually pays.

Is a GPO the answer for hotels?

A GPO pools the volume of many buyers to negotiate group pricing from an aggregated catalog, and used well that leverage is genuinely valuable. The catch is how many GPOs earn their money: by marking up your spend or keeping a share of supplier rebates, so part of the value never reaches the hotel's books, and catalog-driven buying can pressure a property to standardize onto the GPO's contracted suppliers. For a hotel, where the chef's specialty purveyors and the banquet program are part of the guest experience, that is a real trade-off.

The operator-favorable alternative is managed procurement. CORE is not a GPO, it is the better, more transparent option: one agreed fee for the work rather than a markup, 100% of every rebate and allowance passed back to you, and your existing distributors kept in place while CORE opens the wider market category by category. CORE delivers this for hotels and restaurants through CORE360, and is GPO-agnostic, able to work alongside whatever GPO a hotel already uses to extract more value from it.

The practical differences come down to four things:

• Payment. GPO: often a markup on spend or retained rebates. Managed procurement (CORE): one transparent, agreed fee for the work.
• Rebates. GPO: may keep some or all. Managed procurement (CORE): 100% passed back to the hotel.
• Suppliers. GPO: buy from an aggregated catalog. Managed procurement: keeps your distributors and opens the wider market.
• Visibility. GPO: rebates and margins settled behind the scenes. Managed procurement: full transparency into what you actually pay.

What does this look like for a real hotel operator?

CORE serves hotel operators, including Sonesta, alongside restaurant and club clients such as Specialty Restaurants Corporation and Gecko's Hospitality Group. The pattern is consistent: rather than ripping out trusted distributors, CORE organizes a property's spend into one managed program, opens the market beyond any single supplier, and renegotiates category by category so the hotel keeps the relationships that work and gains leverage where they do not. The savings show up as lower costs and clearer visibility, not as a downgrade guests can taste.

"We started CORE to make sure that operators were getting the value they rightfully deserve, and that no one was profiting from their business without providing value." Ross Kellman, co-founder, CORE Insights Group

How much can a hotel actually save?

It varies by property, outlet mix, and category, so any honest answer starts with your numbers. But the math is favorable: with cost of goods running roughly a quarter of F&B department expenses and F&B margins improving across the industry, even a few points off purchasing compounds across every outlet and every property in a portfolio. The savings come from better pricing, full rebate pass-through, tighter contracts, and less waste, never from cheaper ingredients.

See what a managed procurement partner could save your hotel

The cleanest way to size the opportunity is on your own spend. A short conversation, or a year-to-date AP vendor spend report, is enough to show where a hotel's supply chain is costing more than it should, and how a transparent, operator-first program would lower it without uprooting the distributors and quality your guests rely on.