Why procurement is your secret weapon in a rising wage economy
- Jo Pethard
- 4 days ago
- 5 min read
Updated: 12 minutes ago
With wage costs rising faster than ever, hospitality operators must look beyond payroll to protect their margins. Centralised, data-driven, and sustainability-focused strategic procurement is the secret weapon that can deliver significant savings, operational efficiency, and competitive advantage in a rising wage economy and a challenging market.
The new reality: rising wage economy
Picture this: You've just approved another 8% wage increase to retain your head chef, energy bills are climbing despite your best efforts, and your latest supplier invoice shows food costs up 12% year-on-year. Sound familiar? If you're running a hospitality business in 2025, this scenario plays out across boardrooms nationwide.
From April 2025, the National Living Wage jumped to £12.21 an hour, now covering workers aged 21 and over (£10 for 18-21 year olds). Hospitality wages surged 9.5% in March 2024 as businesses scrambled to attract talent in a market where vacancies remain 15% above pre-pandemic levels.* With frozen National Insurance thresholds adding further pressure, every new hire costs significantly more than before.
This investment in people is necessary and welcome—better pay attracts better talent, and the industry's reputation depends on treating staff fairly. But it arrives at a particularly challenging moment. Energy costs remain volatile, food inflation persists, and consumers are increasingly price-conscious. The traditional response of passing costs to customers has clear limits.
"Hospitality businesses are investing heavily in their people, with wages up almost 10% in the last year, but the lack of movement in vacancies shows the need for the sector to be unshackled in other areas to free it up to invest and drive economic growth." Kate Nicholls, Chief Executive, UKHospitality**
The hidden margin opportunity
When margins tighten, the instinct is to scrutinise the obvious costs—food, energy, rent. These are important, but they're also well-managed in most operations. The real opportunity often lies in an area that rarely gets boardroom attention: procurement.
Non-food operational costs—including cleaning supplies, uniforms, maintenance, technology, furniture, and fittings—can account for a significant portion of hospitality spend. Yet, managers juggling multiple priorities often make procurement decisions at the site level without the benefit of group-wide data or category expertise. The result? Fragmented purchasing, missed volume discounts, specification creep, and administrative inefficiency quietly erode margins on a month-to-month basis.
Five procurement questions every hospitality chain should be asking
1. Are we consolidating spend and leveraging group-wide buying power?
2. Where are we duplicating products or services across sites?
3. Are we standardising specifications to avoid unnecessary variety and cost?
4. Are we using labour-intensive products when labour is our most expensive resource?
5. How are we tracking our supply chain's environmental impact?
Answering these honestly can reveal hidden inefficiencies and unlock new margin opportunities.
From cost centre to strategic asset
The operators who thrive in this new wage economy will be those who elevate procurement from an afterthought to a core business function, treating procurement decisions with the same rigour applied to menu development or marketing campaigns.
Leading hospitality businesses are already making this shift. They're centralising procurement functions, investing in data analytics, and treating supplier relationships as strategic partnerships rather than transactional necessities. The results are evident: reduced costs, improved efficiency, and enhanced sustainability credentials, such as lowering Scope 3 emissions.
Case study: United UK & Gravity Active Entertainment
A standout example is the partnership between United UK and Gravity Active Entertainment. With rapid expansion and increasing operational complexity, Gravity needed a procurement approach that could scale with its ambitions while delivering immediate efficiency gains.
"United UK are professional, reliable, and committed to making the relationship work. Having a team that genuinely understands our business makes all the difference." Craig Garton, Head of Purchasing, Gravity
United UK delivered a single point of contact, replaced multiple suppliers, provided proactive consultative support, and consolidated deliveries, improving both cost and efficiency.
KFC has seen similar benefits: "They've helped us save time by streamlining sourcing and recently carried out a review to identify cost-saving opportunities and fill any range gaps. Their proactive suggestions for alternative products have also been a welcome addition."
The Vantage point: Data-driven procurement
This strategic approach to procurement requires more than good intentions—it demands expertise, data, and systematic analysis. Understanding how a structured procurement review works reveals why the results can be so transformative.
Take United UK's Vantage process as an example of systematic spend analysis. Rather than making broad assumptions about potential savings, the approach begins with a comprehensive evaluation of whether a business can genuinely benefit from procurement optimisation. This strategic fit assessment prevents wasted effort on businesses where the fundamentals are already sound.
The discovery phase reveals the true complexity of most multi-site operations. Current spending patterns are mapped across all locations, revealing the hidden fragmentation that erodes efficiency. A typical review uncovers situations where identical products are purchased from different suppliers at varying prices, where similar functions are performed by multiple products, and where administrative overhead has grown organically without strategic oversight.
The savings review phase applies category expertise and benchmarking data to identify specific opportunities. This isn't about generic cost-cutting—it's about understanding where specification variations add cost without adding value, where volume consolidation can unlock better pricing, and where vendor reduction can streamline operations without compromising service levels.
The presentation of findings provides a clear roadmap for transformation. Rather than overwhelming operators with dozens of minor adjustments, the focus remains on high-impact changes that deliver measurable results: typically up to 20% reduction in product costs through better pricing and specification optimization, 80% consolidation of vendors and administration through strategic supplier partnerships, and up to 80% reduction in Scope 3 emissions through more efficient logistics and sustainable product choices.
The implementation phase proves whether the analysis translates into operational reality. Careful rollout with consolidated vendor solutions ensures business continuity while delivering the promised benefits. Ongoing partnership provides the continuous optimisation that maintains savings over time.
As one Loungers representative noted: "United UK's Vantage review and product expertise have been game-changers for our business, helping us achieve both hard and soft cost savings along with significant reductions in admin time—support that's unmatched in our industry. Especially in times of financial uncertainty, this partnership has been invaluable."
This systematic approach demonstrates why procurement reviews deliver results beyond simple price negotiations. They create structural improvements that compound over time, freeing up management capacity while strengthening the bottom line.
The leadership challenge
Here's the uncomfortable truth: procurement is now a leadership issue, not an operational detail. In an environment where every margin point matters, treating procurement as a back-office function is a luxury the industry can no longer afford.
Businesses that integrate procurement into strategic planning, invest in category expertise, and leverage data-driven decision-making will gain a significant competitive advantage. They'll have lower cost bases, more efficient operations, and greater flexibility to invest in the areas that truly differentiate their offer.
The wage economy isn't going away. Labour costs will continue to rise as the industry rightly invests in its people. But that doesn't mean margins have to suffer. The secret weapon isn't finding ways to pay people less—it's about making everything else work smarter.
Conclusion
The question isn't whether you can afford to take procurement seriously. In today's market, it's whether you can afford not to.
Ready to unlock hidden margin and future-proof your business?
Discover how United UK's Vantage service can transform your procurement strategy.
References:
*Restaurant News Resource. UK hospitality vacancies remain stubbornly above pre-pandemic levels
Contact us:
· Call: 01525 219 219
· Email: vantage@united-uk.com
· HO & National Distribution Centre: 17 Tanners Drive, Blakelands, Milton Keynes, Bucks, MK14 5BU
Post by Jo Pethard
Jo Pethard, Sales and Marketing Director at United UK, is dedicated to empowering hospitality businesses with streamlined supply solutions. With deep industry insight, Jo crafts strategies and content that address the specific needs of United's clients, helping them achieve operational efficiency and growth.
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