F&B cost. Beverage cost. Linen. Amenities. Cleaning chemicals. Stationery. Each is a small leak. Together they are the second largest controllable on the P&L. This module is about closing the leaks.
Procurement in hospitality is usually thought of as F&B's job, but the procurement spend is much broader: F&B COGS, room amenities, cleaning supplies, linen and laundry, paper and stationery, engineering supplies, IT consumables, marketing collateral, uniforms, replacement FF&E. Together these can represent 12–18% of total revenue at a full-service hotel — a number large enough to matter and small enough to be ignored.
The discipline of procurement is not about driving suppliers down on price. That's negotiation. Procurement is about buying the right thing, in the right quantity, at the right cadence, from the right supplier. Those four words — thing, quantity, cadence, supplier — describe four separate decisions, each of which has its own logic.
Most procurement leaks happen because one of these four was decided wrong. Buying premium when standard would do. Buying in bulk what spoils. Buying weekly what should be daily. Buying from a sole supplier without a competitive check.
Food cost % and beverage cost % are the most-watched procurement numbers in hospitality. They are also the most-misunderstood. A 1-point move in food cost is a 1-point move in F&B margin. At a $3M F&B operation, that's $30,000 a year. The numbers are small individually, large in aggregate, and always moving.
The benchmark range for most full-service F&B. Banquets often run lower (lower-cost proteins, scale). Fine dining can run higher (premium ingredients). Casual outlets in the middle.
Wine pours typically 22–30%. Spirits 18–24%. Beer 22–28%. Soft drinks 12–18%. Track by category — a blended beverage % can hide problems.
Every menu item should have a costed recipe. Selling a $32 dish with $11 of food in it = 34% food cost on that item. Menu engineering uses these numbers to redesign the menu around contribution margin.
F&B inventory typically turns 2–3 times per month. Slower turns mean cash tied up and risk of spoilage. Faster can mean understocking. The right number depends on outlet type and supply reliability.
A par level is a target inventory quantity for each item. Min par is the floor — below this, you risk running out. Max par is the ceiling — above this, you're tying up cash and inviting spoilage. Set par correctly and ordering becomes mechanical: at each ordering cycle, count what you have and order back up to par.
Pars work for everything: dry goods, fresh produce, wines, linens, amenities, paper, cleaning chemicals. The discipline is reviewing pars every quarter against actual usage, not once a year against assumptions. A par level set during peak season and never revisited becomes a source of overstocking during shoulder periods.
The other discipline pars require: they only work if someone actually counts. Inventory counts done weekly are the backbone of cost control. Inventory counts skipped because the team is busy are the leading cause of unexplained F&B cost variance.
The choice of how many suppliers to use, and how to manage the relationship with each, is one of the most consequential procurement decisions a property makes. Three approaches in tension:
One main vendor for a category (food, beverage, supplies). Best volume pricing, simplest ordering, deepest service. Risk: dependency and price creep over time.
Primary + secondary, with the split forcing the primary to compete. Less volume leverage but built-in price tension. Standard practice in most full-service.
Annual or biennial competitive bid across multiple suppliers. Maximum tension on price, significant management effort, risk of relationship damage with incumbents. Best used selectively on the largest categories.
Joining a hospitality buying group (Avendra, BirchStreet, Foodbuy and similar). Outsources the RFP process to a specialist with massive scale. Increasingly common for branded properties.
In every F&B operation, some portion of food and beverage disappears without producing revenue. Some is spoilage. Some is staff meals. Some is comps and overpours. And some is theft. The job is to know which is which.
By far the largest legitimate source of shrinkage. A bartender pouring 1.75 oz instead of 1.5 is a 16% beverage cost increase invisible to anyone but the inventory count.
Manager comps and guest-recovery drinks that never enter the POS produce "missing" inventory that looks identical to theft.
Goods invoiced and paid for but never delivered, or delivered short and never adjusted. Receiving discipline at the back door is the single highest-leverage procurement control.
Disguises itself as cost-of-sales but is really a planning failure. Pars set correctly prevent most of this.
Real but smaller than most managers fear. Persistent unexplained variances in the 2–3% range warrant investigation; isolated spikes usually point to one of the four above.
This exercise has more discovery in it than calculation. Pull last quarter's invoices and inventory reports. Walk through the four steps.
Procurement is one of the most local disciplines in hospitality — what works in one market or under one brand standard may not work elsewhere. Compare notes.
Usually there's one. A category that's been a single-supplier for too long. A par level set by someone who left two years ago. A receiving process that doesn't actually count.
Many properties belong to a group on paper but procure outside it for the items that matter most. The reasons are usually worth examining.
Process explanations are more common than theft. But if you've been telling yourself "process" for six months without a fix, theft becomes more plausible.