The hidden cost of poor quality in hospitality: Why investing in excellence pays off

In hospitality, poor quality doesn’t just frustrate guests — it quietly erodes your profits, staff morale, and brand reputation.

While a single service mistake or compliance slip might seem minor, the collective cost of poor quality (COPQ) adds up fast. In this article, we explore how COPQ affects hospitality venues, and how investing in excellence — through staff training, systems, and leadership — can turn things around.

What is the cost of poor quality (COPQ)?

Cost of Poor Quality (COPQ) refers to the total costs a business incurs when its service fails to meet expectations — whether that failure is visible to guests or not.

In hospitality, COPQ is typically made up of four categories:

• Prevention costs – Training, maintenance, compliance programs
• Appraisal costs – Audits, inspections, quality checks
• Internal failure costs – Wasted time, food spoilage, staff rework (before the guest notices)
• External failure costs – Refunds, discounts, negative reviews, lost bookings
  Ultimately, COPQ is a hidden drain on your margins — but it’s a cost you can control.

How poor quality shows up in hospitality

In fast-paced hospitality environments, quality failures are common — and costly. Here’s how they typically appear:

Service errors

Incorrect food orders, forgotten wake-up calls, delayed check-ins — all reduce satisfaction and increase recovery costs.

Food safety risks

Poor food handling or hygiene can lead to health issues, fines, legal action, and lasting brand damage.

Booking and reservation mistakes

Lost bookings or overbooked rooms often result in refunds, relocation costs, and angry online reviews.

Cleanliness and maintenance issues

Unclean rooms, broken amenities or pests can lead to immediate guest complaints — and long-term reputational loss.

Regulatory non-compliance

Failure to meet liquor licensing, WHS or food safety standards can cause serious fines, legal costs, or even forced closures.

The financial and reputational impact

Financial damage

Poor quality eats into profits through:

• Refunds and discounts
• Food and resource waste
• Overtime and staff rework
• Fines, legal settlements
• Increased acquisition costs (to replace lost loyal guests)
   

 💡 Did you know?
In hospitality, the hidden cost of poor quality can reach 12–16% of total sales revenue.

Reputational harm

Today’s guests don’t just experience bad service — they share it. One poor interaction can lead to:

• Negative reviews and public complaints
• Lower online ratings and reduced visibility
• Less repeat business
• Weakened brand image and pricing power
   

💡 Did you know?
A UK survey found 82% of customers would switch hospitality brands after a single bad experience.

But there’s good news too. Research shows, most guests leave online reviews to reward great service — meaning your reputation can grow just as fast when quality is consistent.

How to reduce COPQ in hospitality

Reducing COPQ isn’t just about fixing problems — it’s about designing quality into your business from the ground up. Here’s how:

1. Invest in staff training

A well-trained team makes fewer costly mistakes. Partner with trusted providers (like Allara Global) to upskill staff in areas such as:

• Food safety and hygiene
• Responsible Service of Alcohol (RSA)
• Customer service and communication
• Workplace compliance

2. Implement quality assurance programs

Use regular inspections, mystery shoppers, and audits to catch small issues before they impact guests.

3. Collect and act on guest feedback

Encourage real-time feedback so you can fix problems on the spot — and reduce long-term reputational damage.

4. Stay ahead on compliance

Conduct regular audits of food handling, alcohol service, WHS standards, and staff conduct to stay compliant and reduce risk.

5. Embrace continuous improvement

Review processes regularly. Empower your team to suggest fixes and foster a “do it right the first time” culture.

6. Lead from the top

Quality starts with leadership. When owners, GMs and managers consistently model high standards, it becomes part of your venue’s DNA.

“It is most important that top management be quality-minded. In the absence of sincere manifestation of interest at the top, little will happen below.”
 
— Joseph M. Juran, Quality Control Handbook

Conclusion: Quality is your best investment

The cost of poor quality is real — and expensive. But the solution is clear. By investing in training, systems, and a culture of excellence, hospitality venues can:

• Reduce waste and rework
• Avoid legal and compliance risks
• Strengthen guest loyalty
• Enhance their brand reputation
• Boost profitability

In hospitality, quality isn’t an optional extra. It’s the foundation of sustainable success.

Ready to reduce your COPQ?

Want to turn quality into a competitive edge?

Partner with Allara Global to upskill your team, meet your compliance obligations, and exceed guest expectations — every time.