50 ways to save … and make money
They say that if you look after the pennies, the pounds will look after themselves. Faced with a global economic downturn, smart operators are using every trick in the book to extract maximum value from their customers, suppliers and business processes. In association with P&G Professional, this supplement showcases the ways in which the most forward-thinking operators are creating value in their businesses. Daniel Thomas reports
Articles below the 50 top tips for saving and making money include:
- First impressesion that can lead to bright futures, by P&G Professional;
- How have hoteliers responded to the recession?;
- How have pubs responded to the recession?;
- How have restaurateurs responded to the recession?;
- Mystery shopper programme boosts service;
- Training workshops boost productivity; Improving management skills generates profit; and
- Automating back-office processes boosts profitability
1.CONCENTRATE ON YOUR LOYAL CUSTOMERS
Consolidate and expand that base before you spend time trying to attract new customers - they will be far more difficult, more costly and more time-consuming to attract, with less certain results. While it's important to offer special deals to attract new business, a priority in difficult times is to reward your loyal customers in order to encourage them to come back and to spend more. They are already committed to you. Encourage them with added-value deals to become even more committed.
2. FOCUS ON YOUR BUSY TIMES
Try to maximise business when you're busy and when it doesn't cost so much to attract customers, rather than spend money and effort on building up the quiet periods. By their nature these are always more difficult to fill and they yield less revenue anyway because you have to offer discounts or special deals. Your busy periods are times of peak spend - take full advantage of them.
3. DON'T NEGLECT YOUR INVESTMENT IN PEOPLE AND FACILITIES
Skilled people are more efficient than unskilled and need less supervision. Invest in training so that you can employ fewer, smarter people doing a better job. And invest in the fabric of the business. Times are tough and funding is difficult but constant reinvestment is the secret of any successful business. If you invest in the downturn, you're better able to benefit from the upturn when it comes.
4. AIM TO BE THE BEST AND FOCUS ON FIVING THE BEST VALUE
Aim to be the best in the street, the best in the town, the best in the county, the best in the country. That's the secret of success of any business. If you can be the best in what you do, then you'll succeed. The public will always recognise quality and best value.
5. KEEP AN EYE OUT FOR A BARGAIN
Most suppliers run regular price promotions, so keep an eye out for these. Suppliers often use them to trial new lines or pass on savings from manufacturers for certain products. They can be an excellent way of offering customers promotional "specials" where you can save money and increase your profit margins by selling a dish at a preferential price.
6. COST UP YOUR MENUS
Make sure that all your menus and drinks are regularly costed and priced correctly so that your current sales mix generates your target profit margin. Re-engineer your menus or replace dishes that don't earn you enough and train your team to "sell" the higher-margin products.
7. GO GREEN
Going green makes great business sense. There are numerous ways you can, at little cost, make "greener" business decisions and save money, too - from small steps such as energy-saving light bulbs, to longer-term measures such as reducing carbon emissions. This is also a useful marketing tool as consumers are increasingly demanding that the companies they use demonstrate their environmental credentials.
8. THINK LOCAL AND SEASONAL
Even in the downturn, consumers are still very interested in local products. Talk to your suppliers about the local foods they can supply and make your menus seasonal. It gives your waiting team a good talking point with customers, it's good for your local economy and it can help to reduce your carbon footprint.
9. PRODUCT SUBSTITUTION
When prices for some ingredients are high, look at what you could replace them with. For example, talk to your butcher about different types of meat or using less-traditional, less-expensive cuts on your menu. Cooked slowly, these can be as tender as the best cuts and full of flavour and they are becoming increasingly popular, too.
10. WORK WITH SUPPLIERS ON PAYMENT
We are all used to the concept of developing customer relationships, but better supplier relationships can pay dividends too. For instance, if there is a long-term track record with a supplier, a company could ask for payment terms to be renegotiated, whether permanently or as a one-off. Usually, it is better to ask in advance, rather than to present a supplier with a fait accompli, although large firms such as utility companies are unlikely to be very flexible. That said, it is worth checking with all suppliers if they offer early-payment discounts.
11. FOCUS ON CREDITORS AS MUCH AS DEBTORS
While many firms are very focused on debtor account, far fewer have clear internal processes to track and manage creditor accounts. This is missing a trick, because the truth is that while the former is important, small businesses have little control over incoming accounts, especially in current market conditions when most customers are going to be holding on to their money for as long as possible. Outgoing funds is an area where firms theoretically have more control.
12. "A LITTLE BIT OF WORK EACH DAY CAN KEEP PROBLEMS AT BAY"
One of the easiest yet most effective ways to improve cash-flow management is to spend a little time on it every day, rather than leaving everything to the end of the week or (worse still) to the end of the month. This can lead to missing a payment deadline - incurring a penalty - or not noticing that funds expected into the business account from an overseas customer a couple of days ago have not yet arrived. The result can be a classic cash-flow crisis, whereas a little bit of work each day can keep problems at bay: just a couple of minutes can make all the difference. Web-based tools and mobile access means that executives can carry out accounts tasks during "downtime" such as waiting for a train.
13. MAKE THE MOST OF ONLINE ACCOUNTING TOOLS
While online accounting tools are no longer new, businesses could be making more use of them to manage cash-flow on a daily basis. For instance, some systems can be configured to send alerts when an outgoing payment is due, or to check if an invoice has been paid. The very latest systems even incorporate daily bank feeds, so information can be truly "real-time" and a company can always have an accurate, overview of its cash situation, as well create cash-flow forecasts for the rest of the month, all for relatively little effort.
14. CLEAR INPUT PROCESS
15. PROMOTE SUSTAINABILITY
Fishmongers can provide you with a host of information on sustainable fish - look for MSC (Marine Stewardship Council) accreditation. Some of the less well known but equally delicious fish are more plentiful and cheaper - for example, pollock and hake are good alternatives to cod and haddock (check out supplier websites such as M&J Seafoods for menu planning ideas)
16. THE CUSTOMER KNOWS BEST
Take the time to research and understand what your customers want. A range that is too aspirational/costly may turn off budget-conscious clientele - but if your customers have the money, give them an upper-end range to choose from.
17. BRANDS AND BRANDING
Customers are brand loyal when it comes to drink and recognise that brands usually attract premium pricing. If you use branded drinks, including in cocktails, make sure the customers know, whether that is Tazo teas or Hendricks Gin. Also, talk to your suppliers about brand support - there are often opportunities for product sampling events, promotional materials such as tent cards, posters, ice buckets and branded glasses - even branded fridges.
18. BE REALISTIC ABOUT PRICING
The hospitality industry has always been hammered with frequent duty hikes. However, many businesses fail to pass on these increases to customers, often because they are in a highly competitive environment. Explore opportunities for introducing alternative brands as a means to increase prices of some products or promote the fact that you are swallowing the price rise for a certain period of time.
19. CASH MARGIN OR GROSS PROFIT PERCENTAGE?
A higher-quality product may cost slightly more but sells at a premium price, often generating a greater cash margin. Cheaper products may command a higher gross profit percentage, but it's what you bank that counts. Look at the success achieved by "premium session" beers such as Becks Vier, and the higher price points of packaged ciders such as Kopparberg or Magners versus draught.
20. GET THE BASICS RIGHT
It seems obvious, but we've all been to places where this doesn't happen. Make sure the beer lines are clean, you have fresh lemon or lime for long drinks, the right amount of ice, shining glassware (branded where appropriate) - all of these contribute to a better drink experience for the customer which in turn drives repeat purchases and more profit.
21. IMPROVE MARGINS ON DESSERTS AND STARTERS
Operators can use starters and desserts to improve their margins as they are relatively cheap to produce. However, customers are very observant when it comes to price increases and could opt for just a main course if the price of starters and desserts rises too high compared with the cost of a main course.
22. LISTEN TO YOUR EXISTING CUSTOMERS
There is no need to reinvent the wheel. You will get 99% of your good ideas from your existing customer base.
23. GET ADVICE FROM EXPERTS
There are lots of organisations out there that can provide support - sometimes financial - from local chambers of commerce to tourism bodies to Government agencies such as Business Link. There is a danger that you can get too immersed in your business if you don't talk to people, even if it is just to confirm plans you already had.
24. ENTER AWARDS
Getting recognition, whether a local tourism award, Investors in People status or recognition for your food offering brings a number of benefits - differentiation from your competitors, good PR - and boosts the morale of staff.
25. PIGGYBACK LOCAL EVENTS
See what is going on locally, such as arts festivals, sporting events and concerts, and see if you can become a preferred supplier. It offers opportunities for cross-referral and means you are being promoted by someone else, without the cost and effort of doing it yourself.
26. PURCHASING
If you are a larger operator, make sure you take a disciplined approach to purchasing. Make sure departments aren't buying outside your agreed purchasing agreements.
27. PRODUCE DAILY ANALYSIS SHEETS
This daily set of figures allows management to know on a daily, accumulative basis how rooms, food, beverage and room-hire sales are doing against budget. This allows immediate action to be taken if required.
28. USE TECHNOLOGY TO IMPROVE BACK-OFFICE PROCESSES
When you are fighting to keep customers, the last thing you want to do is cut your front-of-house services, but there are a number of efficiencies to be gained in the back office through technology, whether purchasing, payroll or stock control. The growth of what is called "software as a service" means it is now cheaper to automate these processes.
29. STICK TO YOU PRINCIPLES
A lot of people are shying away from their ethos and starting to discount or change the way they operate the business because they're being reactive. It's important to stick to your principles, philosophy and ethos as a business and guests will recognise that even in the bad times you stick to your standards.
30. WORK HARDER THAN EVER BEFORE
Look at your business every day and see what can be improved. Get your staff involved because they sometimes have great ideas. Front-of-house staff should know customers better than anyone and kitchen staff must know costs, so get them interested in numbers as much as possible.
31. STAY POSITIVE
Don't talk about the recession and try to maximise the business you know is there, rather than focusing on the business that isn't.
32. KEEP ON TOP OF THE SITUATION
It's important to understand the recession cycle and ensure you are in the right position to react to change. Don't believe that what you are seeing today will be correct tomorrow. Keep an eye on the balance sheet and don't get too indebted to the banks.
33. REASSESS YOUR WINE LIST
Focus on wines that are not necessarily famous, but are good value for money, as the more famous wines can be overpriced by as much as 25%. There is now a habit for sommeliers to follow the trend, looking at critics' scores rather than relying on their own judgement.
34. LOOK THROUGH THE BINS
Cook totally seasonally and squeeze every last penny out of your food by using every single thing - even garlic peel can be used in stock. Look through the bins - it's unbelievable what chefs throw away that can be used to make something delicious.
35. DON'T REPLACE STUFF UNNECESSARILY
Look in your stores and make sure you use up everything you can. We normally order new linen and silver annually, but not this year and we've found things in storage we'd totally forgotten we had.
36. IMPROVE THE GUEST EXPERIENCE
Don't be too focused on the bottom line. Focus on your guests, give them a great experience and a reason to want to come back. If you look after your people, they'll look after your guests, and your guests will give you profits.
37. BE BETTER AT WHAT YOU DO
Counting costs is important, but you have to continuously improve the customer experience without having to rely on gimmicks. People are a lot more educated about food than they were 10 years ago, but they have less money to spend, so it's all about quality and adding value.
38. INVEST IN YOUR CORE PRODUCT
Keep it simple, stay focused and reduce central costs. Put all your money into your restaurant/hotel/pub. Use your general managers to do the marketing and push people hard. Good systems will mean staff spend less time in the office, freeing them up to work in the operation.
39. DON'T DROP RATES - BUT ADAPT PRICING MODEL
Resist the pressure to drop your rates, as next year you won't be able to put them back up and you'll never make a profit. Adapt your business model, offer three nights minimum stay and insist on prepaid bookings so that businesses cannot pull out at the last minute.
40. STAY ON TOP OF ALL FINANCES
Check every single invoice you receive and make sure you pay for exactly what you get. Look through your bank accounts, and reconcile everything. You only need your credit card machine not to be polled one night and that can be the difference between success and failure - and sometimes it does happen.
41. LOOK AT YOUR WAGE BILL
Remember that: a) The minimum wage for those aged 18 to 21 is 97p per hour cheaper than those aged 22 or over and b) Employer's national insurance cuts in at £105 per week, so two or three part-time staff may not only reduce your wage bill but give you more flexibility, too. It is amazing how many people would like to job-share to give them better work/life balance.
42. LOOK AT INNOVATIVE RECRUITMENT METHODS
The Government will do this for nothing through Jobcentre Plus on www.jobcentreplus.gov.uk/ or you can use a free web-based service such as Gumtree on www.gumtree.com. Better still, use your own social networking site on Twitter or Facebook.
43. DON'T FLUSH AWAY YOUR PROFIT
Fitting an economiser to your urinal can save you £400 a year on your metered water bill. Companies such as WaterWatch (www.urinalflushcontrol.co.uk) offer a money-back guarantee that if their device does not save you money they will give you a full refund.
44. STOP CLEANING YOUR BEER LINES WEEKLY
It wastes good beer, expensive water and adds to your staff costs. Investigate the use of Stayclean, which offers a free one-month trial and a 100% money-back guarantee if you are not fully satisfied.
45. INCENTIVISE STAFF TO REDUCE WASTE
Get every team member to place a new piece of kitchen roll over the drip tray every time they serve with the motto of "Let's Try to Keep It Dry". Reward the staff member with the most dry sheets and everyone gains! When it comes to over-serving, it pays to be particularly careful with Continental-style lagers served into lined glasses. It is a natural instinct for your team to fill the glass but this can cost you a lot of money. Consider asking your supplier to put these products on a metered dispense system if they form an important part of your business.
46. STOP WASTING ELECTRICITY
Two gadgets are available from www.letsautomate.com. One is an automated switch for lights in toilets and other areas to be switched on and off automatically on entry/exit for just £46 and the other is an "owl meter" (£39.99) which constantly tells you via remote display just how much your electricity is costing you at that moment. The site claims savings of 25% which you may find hard to believe, but even a 5% saving is good.
47. SORT OUT YOUR BANK CHARGES
The Alliance & Leicester Bank (now part of Banco Santander) is up to £1,200 cheaper for a typical licensed business than any other bank. Even if you won't change banks, please stop writing cheques - pay everything by BACS or internet banking or pay all your cash into Alliance & Leicester and transfer it to your main account as you need.
48. REGULAR STOCK TAKES
Cut out theft and maximise your profitability by having regular stocktakes from a good stocktaker. Some advise fortnightly stocktakes, but the least you should adopt is a monthly review. Any good company will advise you when it is prudent to reduce the frequency beyond this.
49. CONSIDER HOMEMADE SOFT DRINKS
Don't break your supplier agreements but work your way round them. Offering home-made smoothies, juices, milkshakes and traditional lemonade not only gives you a great healthy USP (and possibly a great PR opportunity) but it also reduces your dependence on expensive tied products with a resulting increase in your margins.
50. CHALLENGE STAFF TO FIND COST SAVINGS
Get your team involved in cost savings by challenging them to find ways to save you money. Offer a strong incentive for ideas that work and you carry the whole team with you. Whatever you do, enjoy the thrill that comes every time you make a saving or do a better deal. Trading when times are tough can be great fun because it makes you look for the offers that you really did not have to seek out in the times of plenty. It's a different challenge, but equally rewarding as every pound saved on costs is roughly £3 less that you have to take in the till to make the same profit.
FIRST IMPRESSIONS THAT CAN LEAD TO BRIGHT FUTURES
It's essential to make savings - but hospitality businesses need to beware false economies, says P&G Professional's managing director Adrian Camp.
The economic downturn has hit the hospitality industry hard. To survive, businesses must ensure that every facet of their operation runs efficiently; and every penny of value is wrung from every pound spent.
This supplement features best practice tips and recession-busting secrets from leading players across the industry on how best to save and generate money, and therefore run successful businesses, in 2010.
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HOW HAVE HOTELIERS RESPONDED TO THE RECESSION?
Lee Rainford, account manager at booking website Laterooms.com:
"One of the great things about the recession/downturn is we have seen hoteliers getting a lot more thoughtful with their propositions. The most successful ones have been:
"Encouraging longer stay in the hope of securing incremental revenue. This has been in the form of offers such as "stay two nights, get 10% off" or "three for two", both of which are really easy to implement in most online channels (see below).
"Beginning to follow budget airline-style pricing strategies with cheaper rates with restrictions, early booker discounts (see below).
"Upselling. We're seeing more sensible gaps between offer and room types, hoteliers more open to trying to sell their top room styles through online channels. And why not? We're successful at it.
"Adding value. Proprietors have been finding some very interesting ways of adding value, securing deals with local restaurants, attractions, parking and making them available to guests who meet certain criteria, such as staying two nights.
"The most important thing for me is: by all means lower your prices (and this works for restaurants too), but don't have the cheap option as the only way to sell your business. We have plenty of hotels who have a low rate offer - maybe an advance purchase - but the users are still booking the value added."
In November, research from industry body BII revealed that pub and bar operators were diversifying their offer in increasingly unusual ways to combat the effects of the recession.
In its poll of 60 members, 94% said they had tried out new ideas for their businesses in the past 12 months, with a further 6% planning to do so shortly.
While many have added extensive food offers, accommodation, post office facilities, and hosting community groups to their repertoire, others provide more unusual offerings - including camping facilities, secure wetsuit and surfboard drying areas and foreign exchange services.
More than eight in 10 (84%) have invested up to £5,000 in introducing new ideas, with 52% expecting a return on their investment within six months with a further 30% expecting dividends within a year.
Ashley McCarthy, owner of Ye Old Sun Inn in Colton, has introduced boutique accommodation and a private dining room for travelling diners, as well as conference and meeting facilities, to meet local demand for business facilities.
He plans to undertake a major refurbishment and relocate the recently introduced deli into a new purpose-built addition to the side of the pub, and advises other operators who are considering diversifying to explore every avenue that can generate income within the initial idea.
Steve Blake, owner of Benson Blakes Bar & Grill in Bury St Edmunds, has diversified by expanding its food offering, investing £6,000 in the process.
New services include offering a gourmet barbecue service off-site as well as a "Man with a Pan" service where the chef, armed with very large pans, is despatched to cater for any number of people at their premises. He has also successfully introduced an outside bar service which has proved very popular with customers.
Peter Colvin, owner of La Concha in Letchworth, Hertfordshire, has overhauled the tapas bar's drink offering, including wine tasting for customers, a wider range of non-alcoholic drinks ("to keep the drivers happy") and improved presentation of drinks.
One of the more innovative measures he adopted was changing the wine list to include phonetic pronunciations of wines that people may have felt embarrassed to order.
Colvin's advice for operators considering diversification? "Be prepared to depart from your own ideas and follow the needs of your customers. Above all listen to people's opinions. Research the market, visit similar operators, particularly those that appear busier than the rest. Have an angle that makes you different and more desirable than your competitors."
CASE STUDY: PAY BEFORE YOU STAYBeppo Buchanan Smith, owner, Isle of Eriska Hotel (2008 Catey winner, Hotel of the Year - Independent)
"At the start of this year one of our retired guests mentioned that his money in the bank was earning no interest and asked about any reduction if he paid before he visited. Thinking on this - and the growth of late bookings causing uncertainty - we launched a rate called "pay before you stay".
"It has to be booked 14 days before arrival and was payable at time of booking. It is also non-changeable and non-refundable - learning from the airlines - and in return we offer a 10% reduction. So far this year we have taken 5% of our forward bookings on this rate and it has allowed us to offer even more competitive rates than normal and has removed uncertainty. We just have to remember not to count on the revenue when the guest actually stays!"
CASE STUDY: EXTENDING STAYS
Jonathan Raggett, managing director, Red Carnation Hotels (2009 Hotelier of the Year)
"At Red Carnation Hotels we've implemented a number of different ideas aimed at encouraging people to stay with us and one of the most successful has been guaranteeing early check-in and late check-out.
"It has required careful management. For example, one or two members of housekeeping need to start their shift at 6am so that the rooms of guests departing early can be cleaned in preparation for early arrivals. Reservations staff are challenged to obtain estimated time of arrival for guests who are planning to arrive early so that appropriate rooms can be allocated.
"Offering a late check-out (6pm) on a Sunday has appealed to guests wishing to make the most of their weekend. In London we have extended last orders for breakfast to midday; this has the added benefit of spreading out the number of guests taking breakfast and reduces the ‘rush' that can occur when everyone decides to put off having breakfast until the last possible minute if last orders are 10.30am.
"At our country house hotel in Dorset the added benefit of offering a late check-out on a Sunday has been that some guests have decided to have lunch at the hotel before departing and we have encouraged this by offering our traditional three-course lunch at a slightly reduced price for in-house guests."
HOW HAVE PUBS RESPONDED TO THE RECESSION? In November, research from industry body BII revealed that pub and bar operators were diversifying their offer in increasingly unusual ways to combat the effects of the recession.
In its poll of 60 members, 94% said they had tried out new ideas for their businesses in the past 12 months, with a further 6% planning to do so shortly.
While many have added extensive food offers, accommodation, post office facilities, and hosting community groups to their repertoire, others provide more unusual offerings - including camping facilities, secure wetsuit and surfboard drying areas and foreign exchange services.
More than eight in 10 (84%) have invested up to £5,000 in introducing new ideas, with 52% expecting a return on their investment within six months with a further 30% expecting dividends within a year.
Ashley McCarthy, owner of Ye Old Sun Inn in Colton, has introduced boutique accommodation and a private dining room for travelling diners, as well as conference and meeting facilities, to meet local demand for business facilities.
He plans to undertake a major refurbishment and relocate the recently introduced deli into a new purpose-built addition to the side of the pub, and advises other operators who are considering diversifying to explore every avenue that can generate income within the initial idea.
Steve Blake, owner of Benson Blakes Bar & Grill in Bury St Edmunds, has diversified by expanding its food offering, investing £6,000 in the process.
New services include offering a gourmet barbecue service off-site as well as a "Man with a Pan" service where the chef, armed with very large pans, is despatched to cater for any number of people at their premises. He has also successfully introduced an outside bar service which has proved very popular with customers.
Peter Colvin, owner of La Concha in Letchworth, Hertfordshire, has overhauled the tapas bar's drink offering, including wine tasting for customers, a wider range of non-alcoholic drinks ("to keep the drivers happy") and improved presentation of drinks.
One of the more innovative measures he adopted was changing the wine list to include phonetic pronunciations of wines that people may have felt embarrassed to order.
Colvin's advice for operators considering diversification? "Be prepared to depart from your own ideas and follow the needs of your customers. Above all listen to people's opinions. Research the market, visit similar operators, particularly those that appear busier than the rest. Have an angel that makes you different and more desirable than your competitors."
MYSTERY SHOPPER PROGRAMME BOOSTS SERVICE
CASE STUDY: BYFORDS
Byfords is a café-restaurant, deli and "posh" B&B in Holt, North Norfolk. In the past two years, owner Iain Wilson has acquired two new businesses - one, in partnership with chef Richard Hughes and the Pigs in Edgefield and another, the Kings Head, in Holt.
The time spent expanding the business meant Wilson was missing out on direct feedback from customers, which he always viewed as vital, particular in the tough economic climate.
To address this, he turned to the Best Practice Forum's "Profit Through Productivity" programme, whose one-to-one advisor, David Wood, suggested a mystery customer programme, focused on frequent customer segments.
The programme saw teams of "shoppers" sampling various areas of the business and feeding back to the management team through Wood.
According to Wilson, the exercise helped Byfords look in more detail at how the business is seen by customers and areas they think it can improve, while Wood said the idea behind the mystery shopper programme was to innovate and to improve on the already exceptional levels of service at the various parts of the Byfords business.
Since implementing the programme, results have been impressive. The café-restaurant has seen turnover rise by 16% year-on-year, while occupation at the posh B&B is expected to top 90%. While luxury purchases have dropped at the deli, the number of customers has increased, meaning overall turnover has remained steady.
"Getting closer to the customers has helped us focus on what is important to them," says Wilson. "Now we are planning regular focus groups to identify further areas to serve and improve."
HOW HAVE RESTAURATEURS RESPONDED TO THE RECESSION?
Lucy Taylor, head of restaurant relations, UK/US, online booking service Toptable:
"This has been a tough year for restaurants. We have seen some established restaurants struggling and some formerly popular venues going to the wall. As far as anyone can tell, the difficult times are not over yet. Contrary to expectations, we have had a significant increase in business over the past year, so restaurateurs may very reasonably be asking themselves just what is going on?
"It was once said that the measure of character is how high you bounce when you hit bottom. Of course, it is disheartening for restaurateurs to struggle with the effects of the downturn, but we have been delighted to see that, in the face of recession, many restaurateurs have mustered their determination to survive and have been able to use the downturn in a creative way. They've put energy into analysing who their customers are and found ways to retain their customer base. One of the most effective methods we have seen is the creation of really good value set menus that showcase a chef's strengths - consumers appreciate the quality of produce that savvy restaurateurs ensure they include on such menus.
"We also find that the restaurants that are among our most-booked are also the ones that are most-highly rated. When customers are promptly and warmly greeted, are served professionally, don't have to semaphore to get the cheque, and are served reasonably-sized dishes that have obviously had some care and attention, they recommend the restaurant to other diners and tend to rebook. None of these details cost restaurateurs a penny, but they pay big dividends.
"So the answer to the question ‘What is going on?' seems to be this: people still want to eat out and have a good experience, but diners have become much more savvy - they want to have a good dining experience that's also good value. When restaurants can deliver that combination - good time plus good value - they will weather the recession and be well placed to resume growth with a loyal client base when times get better."
VIEWS FROM THE INDUSTRY:
Gordon Ramsay, owner, Gordon Ramsay Holdings
"There is no doubt that 2009 has been a tough year for all restaurants. What I have encouraged across my businesses is what I have always maintained: value for money. It is absolutely key that customers feel they are getting the most out of what they spend - good-value set menus are a sure way of achieving this. From Royal Hospital Road through to York & Albany, all my restaurants offer affordable menus, while not stinting on quality or taste."
David Moore, co-owner , Pied Á Terre
"Tough times separate the men from the boys. If you can focus on what the customer wants, and keep your costs under control, you will not only survive the recession but come out of it stronger than before."
Claude Bosi, chef proprietor, Hibiscus restaurant
"Most notably, I have addressed how we structure the private dining room. When we opened in 2007, we had a minimum spend policy. Now, we have no minimum spend and no room-hire fee. Guests feel less ‘restricted' that way. Also, in the main restaurant, we now offer our three-course lunch menu with a glass of wine and a coffee for a set price. At the end of the day, it has to be about value for money. People do still spend, but are more careful about how they spend it."
Angela Hartnett, chef-patron, York & Albany
"We believe it is crucial to provide value for money and as a result we have a great three-course menu for £20. It is available for both lunch and early dinner before 7pm, encouraging more affordable lunchtime and early-evening dining."
Vivek Singh, executive chef/chief executive, the Cinnamon Club
"We've always said to the team that value and price are two totally different things and low prices alone might not be enough to attract customers, even in a recession. There always has been and always will be a space for high-end, luxury goods and they will be successful as long as they are perceived to be good value for money. Equally the recession and slow-down in customer confidence reminded us the age-old virtues of costs controls, tightening procedures and generally running tighter ships resulting in much better efficiencies."
TRAINING WORKSHOPS BOOST PRODUCTIVITY
CASE STUDY: THE COUNTRY HOTEL
The County Hotel in Chelmsford, Essex, was a three-star property with flat turnover and declining food and beverage sales. The hotel was suffering from a dowdy and staid image owing to poor service and product, and was further threatened by new openings in the area.
In October 2008, a new general manager, Graham McGregor, was appointed and he set in place a plan to reposition the hotel. The central tenet of the revamp was a £750,000 refurbishment, but McGregor also needed to improve the quality of the product and deliver exemplary levels of service.
He signed up to the Best Practice Forum's "Profit Through Productivity" (P2P) programme, part of which saw a large number of staff attending training workshops in areas such as direct and eâ€'marketing, managing service excellence, using regional produce, adding value to your restaurant and AA quality awareness.
According to McGregor, all the staff that attended the workshops found them to be beneficial. "The chef has taken on board the need for more local produce - 60% of our food produce is sourced from within 70 miles," he said. "And we have redesigned the website with particular reference to tag words and navigations."
As part of the PTP programme, a personal business coach, Malcolm Gallagher, was assigned to help McGregor in any way needed. "Malcolm helped me to consolidate my thoughts and put them into action," McGregor says. "He was a sounding board."
Five months after beginning the programme, overall turnover was up by 7%, with room hire rising by 24%, food margin up by 4.6% and drinks margin up by 4%.
And more significantly, the County Hotel was graded as a four-star property following an AA inspection, while its restaurant was awarded its first AA rosette.
IMPROVING MANAGEMENT SKILLS GENERATES PROFITS
CASE STUDY: BEST WESTERN CASTLE GREEN HOTEL IN KENDAL
The three-star hotel is set in 14 acres of gardens and woodland with views of Kendal Castle. The winner of the Cumbria Tourism Large Hotel of the Year 2009, it has 100 bedrooms, purpose-built meeting and function facilities for up to 300 delegates, leisure facilities with two "Technogym" studios, pool and aromatherapy treatments. It also offers the two-AA-rosette Greenhouse Restaurant and Alexanders, the hotel's pub in the grounds.
While the company was successful, it wanted to make further bottom-line improvements and, with the help of consultancy Hospitality Business Improvement Management, it addressed four key areas: economics, management skills, team building and sales and marketing.
A structured approach to the various sections of the business saw gross operating profit increasing by 9% moving from 18% to 27.1%, topping 30% in May this year. The target is now 32% - previously thought to be unattainable.
Managing director Tim Rumney says that the programme enabled the team to work more closely together and developed individual skills. "They have a better knowledge of figures and we have a hotel-wide focus on sales. Now all heads of department are skilled at forecasting," he says. "We have far more transparency about the company strategy - we're all moving forward together."
AUTOMATING BACK-OFFICE PROCESSES BOOSTS PROFITABILITY
CASE STUDY: SALAD BAR CHAIN TOSSED
Tossed, the London based salad bar chain, launched in April 2005, with an outlet in Paddington. It has grown to six sites across the capital, with a further two set to open in January.
The company's back-office processes were largely paper-based, but in response to the downturn it has automated a number of the more time-intensive modules, such as payroll and purchasing, with software from Fourth Hospitality.
According to owner and founder Vincent McKevitt - winner of a Caterer and Hotelkeeper Acorn award this year - the recession means operators "are in a fight".
"Everyone is suffering from declining sales so they need to create efficiencies: technology is one way of doing that," he says.
Fourth's People System software includes a biometric identification time and attendance system module meaning staff can't clock each other in and out any more. This has cut daily payroll costs by at least 10%, McKevitt says.
The technology also means it is much easier to open a new site. "It's now just a case of pressing a button," McKevitt says.
Tips compiled with the help of:
Beacon Purchasing, Bob Cotton, chief executive, British Hospitality Association, Stephen Broome, hospitality and leisure director, PwC, Gary Turner, UK managing director, Xero, John Grange, adviser, Business Link, Trevor Brown, business doctor, BII, Ben Hood, managing director, Fourth Hospitality, Richard Muir, proprietor, Cafe Fish, Edinburgh, Sam Harrison, proprietor, Sam's Brasserie and Bar, Chiswick and Harrison's, Balham, Manny Sawhney, owner and managing director, Asperion and Hilltop hotels, Guildford, Surrey, Terry Laybourne, chef-patron, Jesmond Dene House hotel, Chris Barber, food and beverage consultant, Leith's Food Solutions, Ciaran Fahy, general manager, Cavendish hotel, London, Sebastiano Ingaliso, head sommelier, Hotel du Vin, Glasgow, Ken Hom, chef and consultant, Jeff Monk, train manager, British Pullman Graeme Nesbitt , resort general manager, Cameron House, Loch Lomond, Bruce Poole, chef patron , Chez Bruce, south London, James Horler, proprietor and executive chairman, Ego Restaurants.
