Rising food and drink costs hit UK hotels

Core Insights - The UK hotel and hospitality sector is under pressure due to rising food and drink costs, with a notable increase of 5.1% in August 2025, marking the highest level since January 2024 [1][2] Factors Driving Rising Food and Drink Prices - Supplier price increases have led to an average cost of goods sold (COGS) rising by 10% compared to 2019, with some hotels experiencing food bill increases of up to 40% [3] - Supply chain disruptions caused by extreme weather, geopolitical tensions, and transport delays have made sourcing ingredients more expensive and unpredictable [3] - Rising energy prices have impacted food production, storage, and overall operational expenses [3] - Environmental regulations and new taxation measures have increased costs for suppliers, which are then passed down to hotels [3] Implications for Hotels and Restaurants - Food and drink inflation is outpacing overall UK inflation, squeezing profit margins and complicating cost management [3] - Frequent price increases may negatively affect customer satisfaction and loyalty as guests become more price conscious [3] Strategies for Managing Rising Costs - Hotels are revising menus to manage expenses by increasing prices, offering smaller portions, or using more cost-effective ingredients [3] - Some hotels may reduce staff hours or adjust services to remain financially viable [3] - Long-term supplier agreements can stabilize prices and ensure a reliable supply of essential ingredients [3] - Focusing on high-margin items and reviewing popular offerings helps balance profitability and customer appeal [3] - Implementing efficiency measures such as reducing food waste, improving energy efficiency, and streamlining operations can help offset rising costs [3] - Clear communication regarding price changes can maintain trust and understanding among guests [3]