Hotel Profit Margins Decreasing? Five Steps to Reducing Waste

Hotel Profit Margins Decreasing? Five Steps to Reducing Waste

The Impact of Food Waste

US hotels contribute to the generation of 131 billion pounds of food waste every year, resulting in an enormous environmental impact, and a big dent to profit margins.

Waste stretches beyond the physical, say, head of lettuce you’re throwing in the trash. First, the resources required to produce that vegetable have been wasted: consider the energy, water, fertilizer, equipment, and labor it takes to produce that ingredient, and the same for any packaging required. Next, add in the gas and labor required to transport it first to your vendor, and then to your hotel. Don’t forget the amount of time your staff spent taking inventory and prepping the ingredient — once it goes bad, the cost for waste removal, and processing it when it arrives at the dump. Tossing that limp iceberg lettuce is really just, well, the tip of the iceberg when it comes to waste.

The EPA estimates that food waste is the single largest category in any given landfill. This translates to a major strain on the environment — believe it or not, food waste is directly responsible for generating a potent greenhouse gas.

In landfills, which are tightly packed, there’s no oxygen to help food matter break down, and the nutrients from the wasted food can’t go back into soil. Instead, surrounded by garbage and plastic waste, the trapped food rots and produces methane gas. With so much food waste in landfills, it’s easy to see why it has become such a major source of methane gas in our atmosphere.

The good news? Much of this waste is avoidable. Investing effort in better waste-reduction practices and the right hotel inventory software mean a bigger return for your bottom line, as well as the planet.

Below are five tips to help your hotel reduce its waste for healthier profits and a healthier earth.

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1. Leverage data to identify waste at the source

The first step in preventing waste is understanding where the waste is coming from.

The right hotel inventory software solution will fully analyze your inventory, so you can log food waste to automatically update quantities on hand. This integration also means you can easily see what’s being ordered by guests (along with what isn’t) and correlate that data with projected revenues to determine which f0ods and dishes are popular and which are sitting in storage until they rot.

With complete and accurate data flowing through the systems, you’ll also be able to see the profitability of ingredients, inventory that’s expiring before it can get used, and what dishes guests are unable to finish.

The key is to have up-to-date, comprehensive, and accurate data so you can identify trends and isolate the problem areas with confidence. You’ll gain valuable insight into where changes can be made to maximize savings while minimizing costs and environmental impact.

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2. Understand the trends and optimize your menu

Are certain menu items regularly unfinished by your guests? This could suggest your portion size is off. Take another look at the recipe and adjust it accordingly. You can also consider investing in smaller plates, so adjusted portions can still look and feel generous.

Do you find one ingredient is consistently expiring before it can be used? Perhaps too much is being ordered at a time. Or, it may be that the ingredient is only used in a certain dish that may not be as popular on the menu.

Again, the right hotel inventory software will help here. The right recipe and menu engineering tool will help you identify these trends (and others), so you can optimize your menu and tweak or remove dishes that are unpopular or unprofitable, or those that use niche ingredients.


3. Track vendor performance to limit waste from inaccurate deliveries

Many hotels end up paying for things they didn’t order or paying for something that wasn’t delivered at all. This results in scrambling to purchase what was needed or ending up with a surplus of ingredients without a purpose — a recipe for wasted time and wasted food. It all comes down to a simple but frequent error when tracking deliveries.

The key here is to automate the invoice and delivery process: a 3-way invoice match (with the original order, the goods-received note, and the invoice itself) will ensure that your team has everything they requested and are only paying for what’s actually been delivered. Discrepancies are caught immediately. And, with a tool that allows you to manage these invoices by exception and on the go, your team will be able to figure out what’s missing while there’s still a chance to make it right.

As mentioned above, tracking your vendors’ performance is critical when it comes to protecting your bottom line and reducing waste. Seeing how each vendor performs in terms of on-time deliveries, inventory quality, order accuracy, and correct invoicing can help your hotel focus on the vendors who deliver the right inventory at the right time at the right price, so you always have what you need. That all adds up to less wasted time and product, while ensuring that guest favorites are always available.

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4. Better manage your inventory

Managing your inventory is really the heart of the matter — if you always have what you need, when you need it, you won’t end up with much waste. Over-buying and under-buying are the biggest culprits of wasted resources in the kitchen, compounded by wasted cash with last-minute ad-hoc purchases.

With the right hotel inventory software, you can forecast demand more accurately. Algorithms that consider historical data, upcoming holidays, trends, weather, and events will be able to predict what menu items will need to be ordered, so you can make sure you’re prepared. This not only helps reduce wasted food, but also eliminates wasted prep, helps plan labor more accurately, and ensures that guest favorites are available, further increasing your profitability.

You should also think twice about bulk ordering perishable items. They may seem tempting, but you could end up losing more if you end up throwing away unused ingredients. The right data will help you identify what you’ll be using, so you buy only what you need while identifying the right opportunities for buying in larger quantities.

Finally, make sure you properly track product expiration dates. Knowing what you have (labeled clearly) and tracking what to use up first means you are maximizing the availability of each product for your chefs and minimizing the amount that needs to get thrown away.

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5. Get creative

Some waste is inevitable. But with the right insights, you can plan around it and find creative solutions to help minimize it.

For food or ingredients that have been prepped but can’t be re-used in another recipe, look for opportunities in your community to donate leftovers.

But what about the rest, the bits and pieces that result from prep?

Can bones and peels be made into a rich stock? Can scraps be reimaged into new, innovative dishes that can turn a profit? Consumers are gravitating toward environmentally conscious eateries, and savvy hotel owners are seizing the opportunity to rethink kitchen waste.

Finally, what can’t be used or repurposed on your menu should then be composted, where it can break down properly, return nutrients to the soil, and stay out of the landfills.


Tourists are increasingly looking for sustainable offerings when they travel, so eliminating food waste can represent much more than environmental or budgetary savings – it’s the only marketing campaign that saves your hotel money.

Find out more about how your brand can take advantage of these food waste reduction strategies and more through Fourth’s purchase-to-pay and inventory solution.

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