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What’s The Real Cost Of Labour In The Hospitality Industry?

The UK hospitality industry is facing pressure from all sides, what with increases in business rates, rents, price inflation on produce and increases in labour costs. So, how as an industry do we decrease the biggest cost of all – labour, without cutting back on customer service?

Here Matthew Khoury, CEO of LOKE, the tailor-made loyalty, ordering and payment app for the hospitality industry, comments on how operators can reduce labour costs through the implementation of technology, which not only saves time and money for a hospitality operator but also enhances the overall customer experience.

Do we need to be returning to an era of self-service?

The first ‘self-service’ restaurant of real scale was Portuguese inspired restaurant, Nando’s. Customers ordered at the till with their table number and then helped themselves to cutlery and bottomless drinks at a separate counter. At the time, this style of quick-service in a casual dining setting was considered both innovative and indeed unique. Fast forward to 2018, and this has now become the norm.

Today, we live in a world where consumers need everything instantly and with no hassle. Because of this, what we’re seeing is a steady increase in the use of mobile payments apps which allow customers to control their orders and payments from start to finish.

It is no secret that labour costs are the most expensive component of the hospitality industry. In order to reduce these costs, operators are having to turn to technology – whether in the extreme form of chefs becoming robots, or by removing team members from the bar or table service, replacing them instead with kiosk screens, or putting the power of payments directly into the hands of customers through their phones.

Operators need to look at what technology they can implement to help deliver service, ordering and payments more efficiently, whilst reducing labour costs. An obvious step is through customer mobile transactions. To give you an example, JD Wetherspoon and Wagamama both have apps that allow their customers to order and pay at table, which streamlines the process, ensuring it is quicker for staff and easier for customers. Ideally an operator would be on key aggregator apps such as UberEats and Deliveroo that can drive revenue for home delivery but also have own branded solutions to personalise the customer experience, which will drive in store transactions, higher average spends and optimise labour efficiency.

Keep it quick, keep it simple

The two most important functions of the payment or ordering process is that it is fast and simple. Let the customer pay easily and be rewarded for the continual investment to your brand. The beauty for operators is that all important turn of tables to drive revenue. Implementing alternative payment methods such as mobile payments or order at table can improve operational efficiencies and the overall customer experience. It was reported that a pub in Manchester saved over 40 hours of management time a week, purely by enabling contactless and ditching cash in their pub – a win, win, situation for this operator.

Keeping customers happy with less staff?

Put simply, operators need to be managing their resources wisely. The absolute focus for front-of-house teams should be all about delivering a sublime customer experience. Operators shouldn’t be implementing any cost saving strategies at the expense of the customer and technology shouldn’t come into play unless it enhances the overall customer experience. Mobile payments not only encourage customers to spend more but also plays a huge role in reducing labour costs, whilst improving efficiencies and speed of service.

Implementing order at table via the customers mobile can automate the work of team members, freeing up front-of-house teams to focus on customer satisfaction, rather than just taking orders and delivering refills. They key reasons operators implement this solution is to remove the need for a staff member to take the order, reducing labour costs and to remove lost revenue opportunities whereby the customer is deterred from ordering because the staff member/s are too busy or not to be seen.

This allows restaurant operators to bring in significantly more revenue, with features programmed to generate increased sales, whilst keeping labour costs down. It also makes it easier for operators to promote new dishes and higher value dishes – so yet again, another win, win for the operator.

No operator wants to remove customer and staff interaction, and most pride themselves on the quality of service they provide. But what I believe operators fail to miss is that customers get most frustrated when the team member is too busy to give the attention they would like, when they simply want another round of beers or the bill. So instead of providing tools to improve customer satisfaction and prevent missed revenue opportunities they live on an old notion that their staff will do it better. Meanwhile the innovators and adopters of the industry thrive using technology that squeezes every % of profit whilst further deepening the customer relationship and experience.

Is it time for robot chefs?

Minimum wage increases is the main reason operators are looking to technology to reduce costs. Automation and robotics have been present in restaurants for some time now – automating everything from orders and delivery to cooking, rota scheduling and drone deliveries – we’ve seen it all.

Whilst robot chefs do already exist and would appear to be the perfect fit particularly in a QSR environment, they won’t work across every style of service. Some customers want an ‘in and out’ style experience such as Nando’s, whilst others are looking for attentive customer service, such as fine dining restaurants or premium casual dining. The trick when it comes to technology, is knowing the balance of what customers want – ultimately, operators need to be looking at what saves them time and money, and implementing pay-at-table mobile payment or ordering apps is a fantastic way to strike this balance.

For further information about LOKE, visit https://loke.global/ or call +44 7884 058 797

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