5 Operational Faux Pas that Could be Wasting Money
“The pandemic has seen many hospitality companies grapple with new revenue making concepts; but post lockdown the tides will turn, putting your adapted operation under review yet again and exposing you to a number of areas that could be wasting money.
In this blog I’ll be talking about 5 operational areas in your business that I believe will be in most danger of wasting money post lockdown. I’ll also give various tips on how to stop these areas from holding you back as you begin your recovery post COVID-19.”
– Duncan Colvin, Head of Compliance, Venners
1. Sloppy delivery and takeaway options
It would appear that the great British public has grown used to their favourite pub or restaurant, offering a takeaway or delivery option. Now that the infrastructure is in place, it would seem strange to ignore this potential market, as front of house is allowed to open up to onsite service once again. But hospitality operators should be cautious to not allow this operational area to end up wasting money unnecessarily.
Key is to ensure that money is not lost every time the phone rings, or the tablet beeps. As Malcolm put it in his recent article, you should “make sure that this second income stream remains sustainable and doesn’t start competing with your onsite service once this reopens.”
All too often, the true costs of the takeaway options have not been fully costed. Whilst there was a drive to regain revenue throughout lockdown, the focus now should be on solidifying it as a sustainable second income stream that mirrors the qualities of the main business. Your ongoing takeaway service must reflect the experiences of the restaurant.
Presentation, styling, and the menu for those choosing an ‘eat at home’ option should be to a similar standard to those of your business as a whole. Quality packaging is not cheap and whilst there is often a temptation to discount takeaway menus, the truth is that there are additional costs from packaging, intrinsic to each dish, that need to be costed in like any other ingredient.
If you have spent time and money investing in plate choices in the past, to get just the right look, do the same for the takeaway packaging. It is important to ensure you cost and charge the full takeaway package, including the packaging and any presentation stylings.
Commission or fees to any delivery app should also be considered. This is not a cost that has an impact on seated guests, but how is this cost factored in to your overall delivery costings? Ignoring all these costs is inevitably going to result in your forecasts being inaccurate and the operation wasting money in other unaccounted for areas.
It is wrong to assume that a customer has chosen the takeaway option to save money. Convenience to them and a host of reasons as to why they prefer to eat at home, will have also been considered. If they are able to choose from their favourite restaurant menu, they will expect standards to reflect the restaurant. Quality presentation and efficient delivery are worth paying for and a restaurant would be as wise to plan for this and cost it correctly.
2. Sky high staff turnover rates
There is a great deal spoken of what businesses have learnt from 2020. It is also true that staff have learnt a great deal about their employers. Whether furloughed or working through, staff have made a series of judgements about how they were treated and more than ever, this will impact on staff turnover in the future.
Staff turnover costs are directly associated with the culture of a company and it is foolish to believe otherwise. There may be variations for seasonal businesses, but relative costs can still be reduced by an enlightened, inclusive management style. Skill levels and morale will never grow if, as a team, staff are routinely held back by inexperienced management members.
Costs from poor management can lead to increased advertising or agency costs, training, new uniform costs, as well as ‘doubled up’ job training costs to the payroll, ultimately wasting money that could have been invested into other areas of your operation.
As our thoughts turn to reopening and returning to normal, let’s hope that we can retain the goodwill developed with staff over lockdown. It is all too easy, as we revert to being busy, to forget and revert to norms of behaviour that impact your staff turnover for the negative. It is a good idea to plan now for increased interaction with staff, introducing a diary of staff events that will be committed to and continuing with any social networking that has developed.
Staff who feel secure, invested in and of worth to a business will always be the corner stones of building a succesful business. As ‘building back better’ is to be the watchphrase of 2021, it seems appropriate to remind ourselves that retaining and investing in our staff is so much cheaper than starting again.
3. Poor table reservations planning
Closure during lockdown has given us time to plan. Since the roadmap to recovery has been announced, there’s a clear road to also start planning for when restrictions are lifted and guests can flow into our restaurants again. Dreaming that far ahead may seem premature, but in actual fact, it gives us the time to spot and remove any potential inefficiencies that could be wasting money when the COVID regulations are removed.
One question you should ask yourself is: Is there room for making our reservations more efficient?
Imagine if you will that McDonalds took table reservations. It’s a stupid idea of course, but why? People hover for free tables at the busiest of times and were a table reserved it would sit empty, four chairs not earning their keep.
Quick service restaurants have their tables efficiently cleaned and ready for the next customer within seconds. Unoccupied tables cost money. So why do we so often arrange for our own restaurant tables to sit empty, not paying their way.
Country publicans in the summer months see a rush of families at 6.00pm, only to have to turn some away because tables are booked from 7.00pm. That’s a table not earning money for a whole hour. Sunday lunch table bookings at 1.00pm see the table empty for another hour and in most instances with only a single seating.
Time invested in planning the available reservation times is well spent. If you are in the height of the season, do you need to take reservations? A departing table can be reset and ready for the walk ins you are certain will come.
Ok, I know it’s a brave step and not for every style of restaurant. The British weather does not always play ball, the kitchen has limits, and there may be that special client or occasion, but there is always room for better planning to avoid wasting money.
Not taking table bookings until 8.00pm is a good compromise, planning early sittings will work and often preferred by some guests. The aspiration has to be that you limit taking reservations to a minimum. Every chair has to pay its way, make them work smarter for you by investing time in planning your table reservations.
4. Disorderly stockholding practices
For many of us, the lockdowns have forced us to discard fresh and even frozen stock. Bottles have passed sell by dates and crisps and snacks have been passed onto schools or food banks.
Our minds are now turning to restocking, preparing for a new spring and summer trade. It is not often that a business restocks in such a way, maybe only on first opening or on taking over a business to check that expense of the stock truly matches a monetary cost. Once trading, buying ingredients becomes a function of the business, a figure on a stock report or P&L. This unique moment of having to restock should give us cause to pause and plan for better stockholding.
It is time to reflect on this expense. Now more than ever we need to consider whether money used to fill displays and back bars would be better left in the bank. This may be the time to look at introducing par stocks. Consider each item, how much is sold and how long it takes to deliver. This will determine how much stock is needed. Make a note on the stores shelves to remind managers when they order.
Venners have written a number of blog posts related to stock holding and ordering strategies.
5. Neglect to R.T.F.M.
IT departments around the world have this emblazoned on T shirts, often in fluorescent lettering. In case you were not aware, it is a non-too polite way of explaining to people that they might ‘Read The Manual’ before complaining to IT that their printer is broken.
It applies to hospitality managers as well though. In this instance it refers to an instruction to regularly and religiously ‘Read The Meter’. Water, electricity and gas costs can run away with a business and stories of businesses hit by big bills will regularly show that nobody was reading the meter.
Meter readings should form part of any weekly reporting. Head office should be able to monitor use, and match billing information to recent meter reads. Smaller businesses may have signed up to a fixed payment agreement and not be aware that the usage is exceeding the plan and that a huge bill may be on the horizon.
Water leaks can be costly, literally money down the drain. A weekly check of usage against recorded turnover will set a benchmark that can be tested regularly. Burst pipes, of course, wastes water but changes in kitchen prep cultures can often save water and reading the metre weekly will confirm if a new practice has had an effect.
Setting simple operating procedures like this in place returns control and monitors costs of the business, ultimately stopping unnecesarily wasting money.
Operators looking for stocktaking or compliance auditing support during reopening should visit www.venners.com for further information.