The tricky feat of managing meal spend

Eating on a business trip is not always as simple as grabbing a sandwich off a convenience store shelf or casually swiping the company credit card for a five-course meal. These days, challenges may include healthy options nearby your hotel or meeting venue, attempts to look for local cuisines or specialities, and using a payment system of your choice. But perhaps the first variable that crosses our mind when deciding on a place to eat is price. Will the meal price stay within reimbursement limits?

American Express Global Business Travel (AMEX GBT) released a report to understand meal spend and provide savings solutions for companies. The report said that among all the facets of business travel spend, meal spend was the least managed within a travel and expense (T&E) policy.

“Often, even if the meal spend is visible and traceable, procurement managers do not know how to manage it," the report said. "There is usually a lack of awareness on how savings can be driven from meal spend management while also making the process more convenient for business travellers and employees to search, select, and review the most suitable meal options for business travel and meetings."

One way to better manage this is to consolidate meal spend with a T&E policy – and a common way to do this is to introduce meal spend limits or per diem allowances. According to the report, most firms researched set meal limits according to an employee’s home or origin country for business travellers.

“We find that per diem policies are most common in Europe and North America, while in APAC, it’s a mix of per diem and actual spend reimbursement policies,” Harris Manlutac, head of consulting, APAC, Global Business Consulting, AMEX GBT, told CEI.

“We find that this varies by organization size and industry. For companies allowing actual spend reimbursement, their policy typically would have the statement ‘at reasonable cost’ referring to meal spend.

However, setting per diem policies according to origin country of the traveller can be problematic especially for companies with offices across many regions. “This can create challenges when two employees from the same company travel to the same country and have vastly different per diem meal allowances. While standardised policies that set meal limits by destination rather than country origin may require a lot of work to get right, these policies are often viewed by staff to be more equitable,” said Manlutac.

Without standardisation, employees from different countries may have different meal limits, even when travelling to the same country. If the company’s lunch meal limit for travellers originating in the US is US$30, but the lunch limit set for travellers in France is equivalent to US$55, there will be a US$25 difference in what the employees from the US and France can spend on lunch when travelling to Singapore, for instance.

“Successful standardized meal policies are often based on the principle of ‘glocalisation’. In practice, the company still sets standard meal limits for each destination or type of venue, but allowing local exceptions to accommodate the traveller’s specific cultural needs. This would mean a traveller could spend above the limit on a particular meal, but would have to make sure they stay within their prescribed daily meal limit.”

This idea of ‘glocalisation’ of meal spend is a good way for companies to address variables such as cultural differences, food preferences, dining styles, age, and other demographics. Given that limited diets such as veganism and gluten-free diets are becoming increasingly common, companies must consider accommodating to these needs – and might not always come at a cost.

“We are seeing a rise in the diversity of preferences across many areas of people’s lives from how they get their news, book travel to how and what they eat. While employers shouldn’t need to increase their T&E budgets for this, they should make sure they engage appropriate solutions to accommodate the greatest number of preferences across their employee base can be met,” said Manlutac.

“While staff have greater flexibility to make their own eating decisions once they arrive in a destination country, companies seeking a quick win for employee engagement should offer flexibility in choosing airlines and hotels to cater for the range of dietary needs.”

An important process in designing T&E is to benchmark meal spend against other companies and peers. Once a meal policy is put in place, it is important to compare meal spend against other companies’ to evaluate whether your company is setting competitive guidelines as well as to identify additional savings opportunities.

According to the report, it was found that for most countries, dinner is the most expensive option, followed by lunch and then breakfast. UK-based cost centres set the highest average meal limit for dinner (US$86), while France and Spain have the highest meal limit for lunch (US$55). Travellers from Australia and UK enjoy the highest limit (US$33) for breakfast.

To optimise meal spend, Manlutac suggests that companies should also look to leverage technology solutions such as utilizing system governance to enable compliance tracking of meal spend through company expense reimbursement systems. 

“In our research, we have found that business travellers are increasingly using dining or virtual payment apps while travelling. Some of these apps are developing specialised corporate offerings, and we anticipate companies will want to look at these offerings in the future to get further visibility on their spend. Companies could potentially also partner with these up-and-coming mobile apps to reduce cost through discount offers,” he said.

Will the rise of ‘bleisure’ travel complicate T&E? According to Manlutac, no. “While companies are seeing the value in supporting the combination of leisure trips within business travel, policies need to articulate clearly where a company’s financial obligations start and finish. Companies will typically not cover any meal or accommodation expenses for the leisure component of an employee’s travel itinerary,” he said.

To access the full AMEX GBT report, click here.