By David Hunter, The Bowden Group (www.bowdengroup.co.uk)
Ok … we all know that we have been through some very difficult times over the last few years.
If you are still here … VERY WELL DONE … but don’t get to complacent, ‘’cos it ain’t over yet’’ …
I am often asked ‘’how can we survive’’ ?
There are always things that we can do to reduce the overhead costs in any business:
Working with a Hotel client in the North West of England, we were recently asked to use our weekly eMailed report on the business’s Profitability to get the staff’s support for reducing usage of gas and electricity.
Common sense you might have thought.
What happened though really did amaze me.
It wasn’t just that the units of power used weekly reduced by 20% … it was that we COULD save that huge amount … just by asking staff to participate.
Yes, it IS a bit sad that we COULD reduce power usage so much, but the fact that we did do that shows the power of just talking to the Team, and getting their support.
It is clear that the staff feel they have a vested interest in helping the hotel get through an approaching massive increase in Power costs per unit, and that THEY WANT TO HELP.
Sounds familiar?
This is the fourth Recession that I have worked though in my role, and by now I am ready for the fallout of a Recession … but … it never ceases to surprise me HOW everything changes during and after such a period … and it never changes in the same way.
I often say that in Hospitality, Profit is largely driven by:
• Sales … Overall, and Departmental
• Bedroom Sales and the Costs of cleaning those rooms
• Food GP%
• Drinks GP%
• Labour Costs
I promised I wouldn’t write a book for you to print (thinking of the printing costs), so let’s just dip into these one at a time … highlighting the bigger issues or the ‘’quick wins’’ … as there are things we CAN do to help the situation, and we will focus on those.
Sales … Overall, and Departmental
We need to up our game on Marketing … not just increasing the number of people that come to use our facilities, but increasing the Spend per Head of all of those that do use our the businesses.
If we attract some new customers, and get existing customers to spend more per visit … we stand an even better chance.
There are so many special offers and new packages that we can dream up, to increase customer visits.
Bedroom Sales and the Costs of cleaning those rooms
Yes, we have been trying to get more people to book Direct. There are a number of ways we can do that … but asking guests to book direct in future certainly works.
As good as the online OTA agencies ARE … the more people we can get booking direct with us, the better, as it reduces that extra Commission cost.
So … look at your website … how easy IS IT to book direct with you?
We have also been looking hard at the in-room complimentary stuff like hairnets for the shower, how many towels, soaps, gels etc we put out.
Many of the Budget operators now will not clean a room unless that is specifically requested. However, I am not a great fan of that, as its not what we traditionally expect from an hotel.
We have been introducing automatic on/off light sensors in bedroom corridors.
And … some Budget operators have been centrally (at Reception) over-riding the settings that the customer sets on the bedroom heaters … turning them off automatically between the late-night ‘’sleeping’’ hours.
Food GP%
I have a few big tips here:
1. Cost out your menu items in great detail, and formally, and on a suitable spreadsheet
2. Do those costings every single month … not twice a year as used to be acceptable
3. Make very sure that are achieving the right level of GP% on every single dish. There is no such thing as an Industry Standard GP% … it all depends on the type of establishment, what it is, where it is, and how it operates.
4. Reduce the menu size if you can … and use the same ingredients in a number of different dishes … reducing the number that you need to buy in.
5. Negotiate, and renegotiate, and seek at least two other suppliers to compare with to get the best purchase prices for what foodstuffs that you need to buy in. The tough ones might well be: Fruit & Veg / Fish / Meat / Cheese / Oils
6. Get advice on what your Food GP% SHOULD BE.
Drinks GP%
My best tips here are:
1. Take the time to establish what GP% you need … not just overall, but per category of drink (as defined by a licensed stocktaker)
2. Make sure that you price accordingly to be able to achieve your target GP% overall
3. Get help on the Wines side … there is a whole separate pricing strategy for GP%s on Wines, on different types of wine and on the different glass sizes. Call me if in doubt.
4. Try to reduce the Wine List a bit if you can … that helps with cashflow
5. Get advice on what your Food GP% SHOULD BE.
Labour Costs
Here there is no choice … you MUST ACT … and NOW … Labour costs just keep going up … never down … and the Minimum Wage doesn’t really help us in Hospitality.
My top tips are:
1. Do what is known as a Manpower Planning Study.
This identifies exactly how many staff members you need in any one place at any one time … in 15 minute intervals throughout the day … every day … and every day being different.
2. Then, do your rota strictly (as strictly as possible that is) on the numbers that you ACTUALLY NEED …
3. You may need to change the way you employ people … you may well need more Part Time and Casual employees … so that you don’t end up with too many staff on duty at any one time.
4. Get as much flexibility into the manpower system as you can … which can mean you employing MORE people but on LESS hours each.
5. Train your staff well, incentivise them too, but most importantly, respect them and communicate with them.
The ATTITUDE of any member of staff shown towards a customer is paramount, and that often determines whether a Customer returns a second time … and more.
The above will help … but no one should think of it as being easy … it isn’t !!!
SURVIVING … is what we hope happens when you do all that you possibly can.
You also need to be ‘’Relentlessly Optimistic’’ … at the same time.
Panic, worry and being miserable are all things that rub off on others very very quickly.
If you think that I can help you at all …
Give me a call on 07831 407984 or 01628 487613
I will be happy to help. If you quote ‘’I saw you in CLH’’ … the first on-line Video Call session with me will be totally Free Of Charge.
