Front of house: Procurement and supply chains come out of the back office in hospitality

Japanese snack manufacturer Calbee last week switched to black-and-white packaging due to soaring prices of petroleum-based inks, underscoring the vulnerability and unpredictability of global supply chains.

For hospitality, leisure and food and drink sectors, though, it’s a longer-term problem and a more profound shift. Procurement can no longer be considered a back of house function. It's become a margin lever, critical to profitability, brand reputation and operational continuity. 

It’s been pushed there directly and indirectly. The sectors are especially exposed to high third party spend, perishable inputs, and demand volatility. At a time of rising costs, suppliers increasingly shape pricing power, availability and resilience.

Small failures in sourcing, contracting or supplier performance can quickly become lost revenue, erode margins and hit customer satisfaction. At the same time, the industry’s been particularly hard hit by the increases in minimum wages and the rate rises and expansion of the national insurance base. That’s left many businesses particularly vulnerable. 

For now, the pressure looks here to stay. The Food & Drink Federation (FDF) industry outlook points to materially higher food inflation in 2026 (9–10%), driven by geopolitical disruption, energy shocks and logistics volatility. Since the start of 2020, it points out, food prices have already risen by around 39%.

In many organisations, procurement has not kept pace. Visibility of spending is fragmented across sites and categories. Supplier dependency is poorly understood. Commercial decisions are made locally, while risks quietly accumulate.

In a challenging economic environment, these organisations are letting vulnerabilities grow. Eventually, procurement weaknesses are identified – but only when revealed by supply disruptions, refinancing discussions or expansion plans when flexibility is limited and remediation is costly.

Other operators show there is another way, however. They treat procurement and the supply chain as strategic levers, using them to stabilise costs in an inflationary environment, improve availability during peak periods and protect working capital without compromising service. Crucially, they align sourcing, supplier governance and operating models with how value is actually created at venue, brand and group levels.

In hospitality, leisure and food and drink, increasingly procurement doesn’t just support performance; it determines it.

Three actions stand out as making the difference.

In multi site, fast moving hospitality and food and drink businesses, risk and margin leakage typically stem from fragmented buying, local supplier choice and inconsistent terms. Without a single view, pricing pressure, dependency risk and working capital drag accumulate unnoticed.

Many organisations cannot effectively capture and interrogate the data they need. But it’s an essential prerequisite to identifying and controlling rising procurement costs:

• Create a consolidated view of spend, suppliers and categories across brands, sites and channels
• Use this to highlight concentration risk, unmanaged spend and 
• Intervene early, not only after margin erosion appears in results

Availability failures, quality issues or sudden price shifts from a small number of critical suppliers can disproportionately damage revenue, service levels and brand reputation. The risks of disruption are particularly high, and the impacts particularly severe, at peak trading periods.

Without clear visibility across the supply chain and an integrated view of dependencies, concentration of risks and critical suppliers will not always be identified. Organisations also need an in-depth understanding of their critical suppliers and conversations concerning their dependencies, the priority of your sales to their business, and your needs:

• Identify the suppliers most critical to revenue, service delivery and cost stability
• Introduce structured supplier governance, with clear ownership, performance visibility, commercial accountability and contingency planning
• Focus attention where disruption would hurt most, not where spend is merely highest

Sourcing decisions made in isolation, focused only on unit cost, can undermine pricing strategy, menu innovation, expansion plans or customer experience. Cheaper products don’t always mean higher margins.

Cost increases cannot always be avoided or even mitigated. But without an integrated view of purchasing and sales, the margin of products, the competitive environment and cash flow and financial positions, the business decisions over whether to pass on increased costs, or how much to pass on, are made blindly.

Organisations need immediately visibility of procurement and margins, and management information to contextualise this to make commercial decisions:

• Realign procurement strategy, sourcing choices and operating models to how the business creates value
• Ensure procurement decisions consider the margin mix, peak period performance, scalability and brand differentiation
• Ensure procurement supports growth and resilience, rather than constraining them

As the FDF makes clear, 2026 is likely to be a tough year, shaped by sluggish consumer demand, persistent cost inflation and a more interventionist regulatory environment.

In hospitality, leisure and food and drink, the businesses that will come through strong will be those treat procurement as a strategic control point—protecting margin under inflationary pressure and creating headroom for growth.

Organisations that do will deliver affordability while protecting quality, effectively manage supplier economics and working capital, and focus on resilience, not just short term savings. Because procurement can’t be just a black and white exercise in cost control.