What is Operational Excellence in Hospitality

28/10/2022 Duncan Colvin

“As a compliance expert within Venners I often get asked about my take on the topic ‘what is operational excellence in hospitality?’.

My answer is this: Operational excellence in hospitality is about solidifying the ultimate level of ‘trust’ in your business. And by trust I mean being 100% confident that your business delivers the same quality whenever and wherever it is visited. This is not just useful for you to be certain that your business is consistent across the board, it is especially poignant for your teams and your customers too.”

– Duncan Colvin, Head of Compliance, Venners

1. What is operational excellence?

Operational excellence can be defined as the ultimate index to measure the quality of standards, processes and procedures that are adhered to by hospitality businesses. The index can only be truly effective if it covers every aspect of the core principles that uphold a business. These principles include culture, operations, finances, brand and due dilligence.


2. ‘State of operational excellence’ defined

A hospitality business that has achieved a state of operational excellence, is running as efficiently, effectively and profitably as possible. It has reached an optimum level of health and success, enabling it to continue driving further positive change at an amplified level.


3. Why operational excellence is important

What is operational excellence for? According to Forbes, “operational excellence is what differentiates firms with similar offerings and strategies, and though it manifests itself differently from company to company, its impact is clear”.

The practical outworking of operational excellence in a hospitality business is the driving force behind tackling obstacles that limit growth and productivity. Through monitoring operational excellence regularly, businesses can benchmark and improve performance, enhance efficiency, grow profit, reduce losses, tackle fraud, and cut costs.


4. Four components of operational excellence

To fully understand the concept ‘what is operational excellence’ it is first necessary to study its intracacies in detail. By breaking down operational excellence into four key components it is easier to appreciate its multi-factoral role in the effective running of a hospitality business.


Component 1 – Control

Operational excellence in hospitality is about introducing new levels of control across all areas of a business. It can help managers oversee and enforce operational practices, such as stock management. It can also help supervise financial practices, through revenue reporting analysis, till monitoring, EPOS setup checks and other methods.

Maintaining control minimises avoidable losses that can occur in a business. Similarly, ensuring brand ideals are adhered to, through introducing higher levels of control, will improve a business’ reputation. Without governing these elements, operational excellence would be impossible to obtain.


Component 2 – Efficiency

Operational excellence is also about efficient processes and maximum productivity. Workflows and workforces that are operating efficiently keep guests happy, employees motivated and bottom lines prosperous. Plus, businesses that are more efficient will attract better talent and maintain that talent too.

To achieve a more efficient hospitality business, it is imperative to regularly monitor performance, review staff rotas and service execution, examine communication structures, analyse physical movements, and measure outputs. Introducing automation and digital transformation in the right places will also contibute to efficiency improvements in hospitality businesses.


Component 3 – Risk management

Operational excellence is determined by compliance with due diligence requirements in order to minimise risk. Typically, operators would need to be checking documentation records, hygiene and safety obligations, virus prevention tactics, IDs, license holder availability, statutory notices, and much more, to ensure their business isn’t threatened by any unexpected fines or penalties.

Keeping a close eye on financial processes and procedures is equally important for due diligence and ultimately for safeguarding revenue. Basic financial checks that should be completed include internal revenue reporting and banking record investigation, safe checks, cash counts, documentation inspections and payroll analysis. What is operational excellence without these basic check being in place?


Component 4 – Standards

Most importantly, operational excellence is all about monitoring standards by benchmarking KPIs and measuring performance. To do that, hospitality businesses first need to establish internal policies and procedures which employees are expected to follow.

What is operational excellence for the individual business? Standard operating procedure manuals offer a wide range of parameters and typically set out basic guidelines that need to be followed. Within these guidelines there is generally a heavy focus on the quality of deliverables such as service standards, product delivery and brand directives.

Brand specific directives, which protect reputation, can include product display, point of sale (POS), internal signage, in-store marketing, and uniform requirements. Other core brand related points of interest could include ethos, culture, and value assessments, such as sustainability aspirations and their implementation.


4. The watershed moment your business might need

Defining ‘what is operational excellence’ for your specific business can feel like opening up a can of worms. It can also be considered an overwhelming task given the complexity and associated time consuming commitments related to the discipline.

However, once you decide to get started, effective attention that is given to operational excellence can create the watershed moment that your business requires in order to push forward in an upward trajectory.

When beginning the task don’t forget to take all four components of operational excellence into account. There is no point in doing operational excellence half heartedly or in fits and spurts. Consistent attention to operational excellence levels in a hospitality business will not only reveal the true benefits of the discipline, it will also ensure that the journey to success becomes a less turbulent one.


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