Hotel Management Network

Rising food and drink costs hit UK hotels

Across the UK, hotels and hospitality businesses are grappling with rising food and drink costs, which have reached their highest levels since early 2024.

The UK hotel and hospitality sector is feeling the strain from steadily increasing food and drink costs. In August 2025, food and non-alcoholic beverage prices rose by 5.1%, the fifth consecutive monthly increase and the highest level since January 2024.

These rising costs are placing significant pressure on hotel operators, forcing them to reconsider pricing, menu offerings, and operational strategies.

Factors driving rising food and drink prices

Several key factors are contributing to higher costs in the hospitality sector:

Supplier price increases: The average cost of goods sold (COGS) has risen by 10% compared to 2019, with some hotels seeing food bill increases of up to 40%.
Supply chain disruptions: Extreme weather, geopolitical tensions, and transport delays have made sourcing ingredients more expensive and less predictable.
Energy and operational costs: Rising energy prices have impacted food production, storage, and overall operational expenses.
Regulatory changes: Environmental regulations and new taxation measures have further pushed costs up for suppliers, with the burden passing down the chain to hotels.

Implications for hotels and restaurants

The rising prices are having wide-reaching effects on the hospitality industry:

Profit margin pressure: Food and drink inflation is outpacing overall UK inflation, squeezing profit margins and making cost management more challenging.
Menu adjustments: Hotels are revising menus to manage expenses, either by increasing prices, offering smaller portions, or using more cost-effective ingredients.
Operational challenges: Some hotels may reduce staff hours or adjust services to remain financially viable.
Customer impact: Frequent price increases risk affecting customer satisfaction and loyalty, as guests become more price conscious.

Strategies for managing rising costs

Hotels and restaurants are exploring several approaches to cope with these challenges:

Supplier partnerships: Long-term agreements can stabilise prices and ensure a reliable supply of essential ingredients.
Menu optimisation: Focusing on high-margin items and reviewing popular offerings helps balance profitability and customer appeal.
Efficiency measures: Reducing food waste, improving energy efficiency, and streamlining operations can help offset rising costs.
Clear customer communication: Transparently explaining price changes can maintain trust and understanding among guests.