Across a sample of 11 five-star hotel groups TCA tracks, F&B operating margins compressed by 220–280 basis points in Q1 2026 versus the same quarter last year. The compression is real and not a one-off — the patterns repeated across both city and resort properties.
Three structural reasons
- Manpower cost reset. Mid-level kitchen and FOH salaries reset upward by 9–14% during the year as standalone restaurants and tier-2 openings competed for the same talent pool. Hotel HR cycles took 2–3 quarters to acknowledge it; many properties paid attrition costs first and salary corrections later.
- Beverage mix. Wine and spirits revenue per cover declined as international travel rebounded and domestic high-end diners stayed selective. Hotels that hadn’t built strong NAB programmes felt this acutely — you can’t make up the missing alcohol margin on coffee.
- Banquets vs. outlets. Banquet revenue grew (weddings, MICE), but outlet covers in the same properties dropped 6–9% as banquet’d-out kitchens couldn’t maintain outlet-quality. Operators conflated “F&B is up” with “outlets are healthy.” They aren’t.
What the strong operators did
- Ring-fenced outlet brigades from banquet rosters even at 80%+ occupancy.
- Built four-tier NAB programs (juice, soft, mocktail, fermented) with proper menu engineering.
- Moved from monthly to weekly P&L reviews at the property level — the quarterly rhythm stopped catching things in time.