How the Chinese foodservice and hospitality industry can beat inflation in 2022

Although the Chinese hospitality market continues to grow at breakneck speed, operators are facing challenges in the form of fierce competition, increasing food costs and fickle customers eagerly searching for the next big trend. As F&B plays an increasingly important role in a hotel’s value proposition, using technology to reduce food costs by preventing waste is too good an opportunity to ignore. 

Food prices in China rose by 6.3% year-on-year in July 2022. Prices of pork, a food staple in China, rose by 20.2% from a year ago. Although this paints a grim picture, there is still room for growth in China's hotel market, thanks to increasing domestic tourism and business travel and the easing of Covid-19 restrictions. 

Even with setbacks from the pandemic, China's hotel market has grown rapidly over the past few years. China’s hotel industry is predicted to bring USD 64.82 billion in revenue in 2022. With an increasing amount of competition combined with rising food prices, it is now more important than ever for the food service industry to operate with cut throat efficiency. 

Making purchasing decisions during times of scarcity is fast becoming the norm for many kitchen operators. It isn't enough to pass on increased costs to customers by raising prices.  Budgeting for the costs that cannot be reduced is imperative for operators, allowing them to focus on the ones that can, such as purchasing, negotiating with suppliers to reduce costs, and improving inventory management.  Economically and environmentally, addressing food waste is the best operational solution at this point in time. 

One success story comes from the Westin Bund Center in Shanghai. They have teamed up with Winnow to not only satisfy appetites but to protect the planet. By gaining more control over their kitchens, chefs and cooks have helped the Westin Bund Shanghai save 22 tons of food, which is equal to saving more than 56,000 plated meals. Since implementation, the culinary team has had complete insights into what food has been wasted and at what volumes, allowing the team to adapt the menu accordingly in line with this.

Operators have a huge opportunity in front of them to increase their margins and combat food price inflation by reducing food waste. Two years ago, China’s President Xi Jinping launched a campaign known as "clean plate" with the goal of waging a war against food waste. According to statistics, Over 35 million tonnes of food is wasted annually in China equating to 200 billion yuan (32 billion dollars), with the hospitality industry accounting for a large share. 

Sands China Ltd is yet another example of a company doubling down against food waste following a successful reduction programme which reduced waste levels by over 60%. The Team have worked to combat plate waste via the Clean Plate Challenge which saw 97,000 clean plates returned in a bid to reduce plate waste. As well as becoming early adopters of  Artificial Intelligence enabled technology, Winnow Vision, which 'learns to see' food being wasted. 

Winnow has been working with the hotel and catering sector in China since 2015. Working with large brands like Hilton, Compass Group, Marriott and Shangri-La. Through research they found that kitchens typically waste between 5% and 15% of all food purchased. In these environments, around two thirds of avoidable food waste occurs before it gets to the customer’s plate.

Put simply, we are producing too much food relative to the demand on any given day. This presents a huge opportunity for operators to cut food costs by optimising production levels and reducing waste. Kitchens working with Winnow can typically cut total food purchasing costs by between 3% and 8%.

We would encourage all Chinese operators to see food waste as an opportunity to significantly cut costs, whilst also contributing to China’s sustainability journey. In a competitive marketplace and with increasingly demanding consumers, there has never been a more important time for kitchens to run with maximum efficiency. In addition to the financial savings, reducing food waste is also the right thing to do in terms of sustainability.