Why Restaurants Should Keep Their ESG Focus in Tough Economic Times

Businesses everywhere are facing a tough year ahead. In Hong Kong, Nick Moore, Director of Restaurants at The Upper House, says, “Our hospitality sector is navigating a complex landscape of increased economic pressures. Operational costs are increasing significantly, impacting everything from labour to supplies.” Arbiona Cadman, Managing Director of Feste Group, an events and catering company in Hong Kong, names some of these costs as inflation, higher wages and fluctuating food costs.

Graham Long, Executive Chef at East Hotel in Hong Kong, points out that these rising costs are a problem for customers, too. “As with most parts of the world, we must be conscious of the cost-of-living crisis and the effect this has on people’s dining habits. We have to keep refining our offering and how we operate to adapt to people’s needs.” 

Oliver Truesdale-Jutras, Founder & Chef at Re:Growth Singapore, tells us that, in Sinapore, oversaturation is becoming an issue. "Openings continue to outpace closures, diluting the market for even the most voracious diners. Average spend is down across all categories other than fast food, and alcohol has taken a particular hit early in the year. Though some signs of renewal are showing, it's a bit early to forecast a comeback — the economy isn't surging like pre-covid days.” 

Melda Tuna, Sustainability Leader in Operations at BTA, gives us her insights on the business environment in Turkey. “Hospitality businesses are grappling with rising costs, escalating labour expenses, food price fluctuations, persistent supply chain disruptions and challenges in securing financial resources. These pressures require carefully crafted strategies to ensure that businesses remain resilient and competitive.” Inflation and exchange rates pose further challenges. “The impacts of high inflation rates and the continuous rise of the euro and dollar against the Turkish lira make it increasingly difficult to keep up with expenses and adjust our pricing strategy, while ensuring that our customers are well-informed on the changes in price ranges.” 

“We’re also seeing a shift in traveller expectations; guests are more discerning,” adds Nick. “There is a heightened demand for sustainability when it comes to choosing accommodation. This evolving demand is challenging businesses to adapt without compromising on quality or guest experience.” Melda agrees. “Now, more than ever, delivering value for money has become a critical factor, and it is hard to keep customers satisfied.” 

"The lasting effects of COVID-19 have changed how people spend, with many now opting for value over luxury," says Arbiona. "Competition in the F&B sector is as tough as ever, forcing businesses to get creative while still trying to stay profitable — all at a time when guests are looking for creative experiences that fit their budget.”

James Bates, Co-Founder and Managing Director of QVO Hospitality — a group that includes Maray — describes the situation in the UK. “Food price inflation is still lingering, though not as bad as it was at its peak following the start of the conflict in Ukraine. Similarly, the rise in energy costs has settled down, but are still over 20% higher than they were three years ago.

"The main economic pressures are around the upcoming above-inflation National Minimum Wage increase — which we support, but, when combined with the increase in national insurance contributions, the lowering of the national insurance threshold and the reduction in business rates relief, it's just a recipe for inflation. When you pair the increased costs with stagnant wage growth in the wider economy, the issue becomes clearer. We cannot simply raise prices enough to cover the extra costs, and so our bottom line will take a hit. We’re in a fortunate position and are still trading profitably; however, over one-third of hospitality businesses are operating at, or under, break even. It does make me fear for the industry.” 

For these businesses, sustainability isn’t an optional extra — it’s a value that lies at the heart of their strategy and operations. “I don't want to make money in a way that doesn't make sense to me — and over-extractive, unsustainable practices don't make sense to me,” says Oliver. “I try to make food that aligns with how we can eventually feed our growing global population — because, ultimately, why are we cooking for individuals if we don't care about people as a whole?" 

“It’s part of our core values — we have a responsibility to look after our community and the environment,” says Nick. “Our goal is to educate and nurture everyone in embracing sustainability while enjoying the luxury of our offerings. From our design choices to our services and practices, we strive to demonstrate how small, everyday actions can contribute to the greater good.” 

“It's at the heart of everything we do. Even when times are tough, we believe sticking to sustainable practices is key to long-term success," says Arbiona. "It’s not just about doing what’s right, it’s about connecting with our clients, building trust, and strengthening our brand. Focusing on sustainable practices is simply the way food should be (and used to be!).” For Feste Group, this includes focusing on seasonal produce and minimally processed ingredients, working closely with local farmers and suppliers, prioritising animal welfare and even starting their own rooftop farm. "It's the kind of food I want my children to eat, and that's exactly what we deliver to our clients." 

“Sustainability is deeply embedded in both our company’s and personal values,” says Melda. “We are fully aware that, to future-proof our business, implementing sustainability practices is not just a choice but a necessity. Our motivation stems from a commitment to planetary and social well-being, not only for the current generation but especially for the next. We want our legacy to have a meaningful and beneficial impact on both the planet and its citizens.” 

“We are also deeply concerned about climate change,” Melda continues. “The prospect of surpassing the 1.5°C limit worries us greatly, and we understand the urgency of acting now. These factors are far more significant than economic uncertainty. By prioritising sustainability, we ensure that we are not only contributing to a better future for our planet but also securing the long-term success of our company, regardless of short-term challenges.” 

James says, “There is a limit to how much I'm willing to compromise my personal values — ultimately, if I can't go to bed each night knowing that my business is doing all it can to conduct itself in the right way (while acknowledging that we can't be perfect), then it isn't worth running. I also believe there is a strong business case for doing things sustainably. The public is not daft, though: it must come from a sincere place and be part of your wider brand or it will come across as a box-ticking exercise. If you truly buy into sustainability as a business-as-usual approach, it can be an incredibly powerful marketing tool.” 

This point rings true elsewhere, too. “Customers are reducing how often they are dining out, and this is making them more selective in where they want to go,” says Graham. “People want to know they are doing their part by supporting businesses that are conscious of sustainability and the effect this has on other aspects of their lives.” Businesses who can prove their commitment to sustainable practices can use this as brand positioning. “It serves as a strategic differentiator for us in the competitive market,” Nick explains. “By embracing environmentally responsible initiatives, we attract a growing demographic of those that prioritise and share the same values.” 

“Ultimately, cutting down on waste and energy usage helps the business save money,” says Graham. “Sourcing sustainably also ensures that, in the long term, product costs do not rocket because of diminished stocks and resources. This means that we can continue to provide the products and services that people want in the future.” 

“We've seen cost savings, as the implementation of efficient systems reduces waste and operational expenses,” says Nick. “Sustainability is not just a response to economic pressures, but also an integral part of our business strategy.” She shares some concrete examples of how this strategy has a positive effect on the bottom line at The Upper House — appealing to more customers in addition to reducing costs. “In September 2021, we implemented water filtration systems in all guest rooms and R&B outlets, significantly reducing our dependence on bottled water. This not only lowers procurement and disposal costs but also appeals to eco-conscious guests. Our recyclable and reusable amenities minimise waste, contributing to our longer-term goal of eliminating single-use items. These initiatives have led to lower overhead costs without sacrificing service quality — ultimately creating a more enjoyable guest experience.” 

“Overall, our sustainability efforts lead to lower costs, higher efficiency, minimum environmental impact and maximum community support,” Melda shares. “By focusing on sustainable procurement practices — such as sourcing local, organic and Fairtrade products — we support local economies and communities while reducing transportation costs and our carbon footprint. Our waste management initiatives, including reducing food waste and upcycling coffee and starch-based waste, help further minimise our environmental impact and lower disposal costs. Energy and water initiatives also play a significant role in reducing utility costs while advancing our goals. These efficiencies lead to lower operational expenses.” 

It’s not all about cost savings, either; many businesses find that transparent, measurable sustainability work can help bring more customers through the door, as well as easing recruitment struggles. “These initiatives enhance our brand's reputation, attracting more eco-conscious customers while reinforcing brand trust and loyalty,” Melda says. “We foster awareness within our employees and customers and take pride in being an influential brand that advocates for sustainability.” 

"By using energy-efficient appliances, giving our team the right tools, and adding solar panels to our rooftop, we’ve cut down on utility costs," says Arbiona. "Removing single-use plastics and improving our food waste practices not only saves money but also makes the most of our resources. Partnering with local, sustainable suppliers has strengthened our relationships and helped us build a supportive community in the F&B industry, all working toward the same goal. Finally, our sustainable approach really sets us apart in a competitive market: it’s helped us attract clients who value eco-friendly services and are happy to pay a little extra for them."

“It costs more to do things sustainably — there’s no point in sugar coating that fact,” adds James. “That said, I strongly believe that the popularity of our restaurant, and the many brand advocates we have in Liverpool and Manchester, is down to the fact that their values match with ours. That results in more visits and more recommendations — the engine of any business.” 

Oliver shares a lesser-considered benefit. “I think something that often gets downplayed is the creative reward for discovering a way to make things previously thought inedible into something delicious. This might not make a massive difference to the balance sheet, but part of zero waste cooking is having the flexibility to work with great products in a manner where we maximise their use. This doesn't just make economic sense — there is a sense of respect involved as well, which is addictive and compelling.” 

Acting on sustainability now helps businesses to be prepared for environmental, economic and legislative demands further ahead. “In the future, sustainability will become more and more important,” says Graham. “Putting in the work now means we will be more resilient to any economic or societal pressures down the line.” He notes, too, the increasing demand for sustainable practice among customers. “Working to be at the forefront of sustainable hospitality will hopefully mean the growing segment of the public that care deeply about this issue will see our hotel as a sustainable option.” 

“This work will continue to strengthen our brand reputation and customer loyalty over time, allowing us to connect with more like-minded guests,” adds Nick. “Because of the growing demand for sustainable practices within the hospitality sector, embedding these initiatives into our operations not only reduces costs but also creates better guest experiences while making a positive impact on the environment.” 

James agrees. “Doing things sustainably increases brand loyalty and connection. People come to restaurants primarily for the emotional feeling they get. Good food, drink and hospitality is the very minimum starting point, but if we can provide people with that emotional feel-good factor then they'll keep coming back again and again. Doing things sustainably is a huge part of that.” Oliver also shares this view. “We have resonance with a growing group of people who care, and proof of concept that sustainable businesses can in fact be profitable. All of this helps to push the industry in the right direction.” 

“Most sustainable practices are actually just practical ways of living and running a business. Reducing waste, being more efficient and being more conscious about your day to day operations can only be a good thing," says Arbiona. "While we do what we can for our environment because it's important to us, our sustainability efforts also lead to increased customer loyalty and stronger brand reputation. Being a leader in this area positions us favourably in the market. Moreover, as we further integrate sustainable practices into our operations, we anticipate reduced costs and improved efficiency, ultimately contributing to our profitability.” 

Melda says that, in the long run, BTA's sustainability efforts will provide both operational and financial benefits while enhancing brand reputation. “By continuing to prioritise sustainable practices, we are positioning our business for long-term success. These initiatives reduce our resource consumption while providing significant cost savings. They allow us to stay ahead of industry trends, meet evolving consumer expectations, and comply with increasingly strict environmental regulations."


“Our commitments to supporting local communities, promoting ethical sourcing and minimising our environmental impact will help us strengthen relationships with stakeholders, including suppliers, employees and customers," she continues. "This will result in a more resilient, forward-thinking business model aligned with global sustainability goals, ensuring we can thrive in an ever-evolving market.” 

We wrapped up the conversation by asking what advice these businesses would share with other operators who are struggling to balance sustainability with rising costs. Everyone agreed that maintaining a long-term, strategic viewpoint is critical. 

“Sustainability needs to be thought of as an investment,” says Graham. “For example, smart meters cost money to install but will save you money for a long time in the future. Managing waste correctly may require initial investment and time, but having robust systems in place will help stock management, inspire you to make use of by-products and ultimately save you money in disposal and purchases in the long term.” 

Nick agrees. “Start by implementing small, manageable eco-friendly practices that will lead to significant impact over time. It is also beneficial to collaborate with local organisations to share resources and ideas, creating a stronger community focused on sustainability.” 

“Remember that the costs you incur today will pay off in the long run,” adds Melda. “What’s more, sustainability is not just about investment; it’s about aligning your values with actions that contribute to the greater good, which can be measured both in terms of environmental impact and community well-being. Embracing sustainability is not just a moral choice — it’s a strategic one that will help businesses adapt to future challenges and market demands while enhancing their brand reputation. The key is to start small and gradually expand these efforts.” 

"Take it one step at a time," advises Arbiona. "It’s easy to feel overwhelmed by everything that needs to be done, but every little change makes a difference. Take a look at your operations: where can you cut waste or boost efficiency? Maybe it’s energy use or how you handle packaging. Try working with local suppliers to keep supply chains short and support your community. And don’t forget to get your team involved! Their ideas and enthusiasm could spark some amazing solutions. Sustainability isn’t an extra expense — it can actually save money and make decision making in your business a whole lot clearer."

“A large part of what I do now is to help people in the industry figure out ways forward despite the hurdles,” says Oliver. “The knowledge is available. If you have the will, it's really quite a simple path to walk. There are more and more sources of help, including subsidies and even people who will volunteer to help you create a business in the image of responsibility.” 

“I'd start with asking myself why I want to do business more sustainably,” James finishes. “It must come from a deep personal value first and foremost, or the public will see it as what it is: greenwashing. Then I’d educate myself on why things like regenerative farming are important, why it's important to buy fish that is rated 1-3 on the MCS Good Fish Guide, what the benefits are of having energy reduction targets, why electricity is so much better than gas, etc. Once you have that knowledge, you can start building it into your business culture. It's not easy, and there is a short-term cost, but my belief is that it will pay off in the long run.”