Jerry Brand, managing director at Caternet, believes that there are a number of contributors to wasted revenue in the hotel sector. Here he outlines just a few of them here along with ideas and solutions for increasing profits moving forward.
1. Fear of technological change; the speed at which technology is progressing today is frightening, but in reality smaller hotels simply want to use systems that work and are fit for purpose. But the conservatism of change balanced by the lack of end-to-end integrated systems does lead to some hotels operating with poor, outdated technology for too long. While this might not seem an obvious place to look for wasted revenue, poor technology means the organisation loses margin and spends more time than they need to on expensive administration. With new allergens legislation now in force, it is now more important than ever to reduce the paper chase and ensure you keep up to date with regulations on a daily basis – even more reason to make use of the advances in technology.
2. Lack of inventory control; in a poor financial environment cash is king, so the stock holding in a food and beverage operation is very important to get right, otherwise your people are tying up the hotels free cash – and that can be considerable in terms of value depending on the complexity of multiple stock locations. A recent independent survey* discovered that wastage resulting from poor inventory and stock control is the biggest cost drain for more than half of the hospitality industry; proving that this is the big one.
3. Regularly overspending on supplies/not shopping around; too many people are worrying about price comparisons. The silent killer for margin through higher costs is ‘price creep’. The future for eProcurement is to have the suppliers participate in managing their agreed products and prices with each hotel. That way, the hotel is protected from price creep and margin reduction, the chef has the quality suppliers they want to use, and the customer pays the right price for an enjoyable experience, and their loyalty grows.
4. Buying off-list items and ignoring specials; following on from point three above, we then have the ‘telesales temptation’ which gets hotels to buy off-list items which are far more expensive than they are if they are included in your pricing contract. On the flip side, pushing your supplier to provide your food & beverage team with ‘power prices’ will not only give your team great new ideas, but you will save some money too. Modern systems should help you to stop the off-list and encourage the power prices.
5. No understanding of the cost of a plate of food and undercharging customers as a result; back to live prices but adding in forecasting to see what impact the menu mix in food and beverage has on the projected events and services within the property. With modern systems, chefs don’t need to know how to cost dishes anymore, IF they have the right process in place to help them build their menus.
6. Too much paper-shuffling and not enough focus on the job that delivers the bottom line; the traditional order, invoice, confirm goods received and pay supplier workflow is archaic, but is prevalent in many operations. Organisations can save significant cash purely on reducing administration in this area. Re-entering of the numbers/details, searching for invoices or credit notes, and arguments with the suppliers three months later are all high admin drains which can be avoided within a paperless environment.
7. Lack of communication between hotel chef/staff and management; when the team are steaming into their service period, money can be lost if the production team are not communicating properly with the customers or the service team. Communication should be active at all times so that changes are noted and detailed information is given to both sides (chef and management). That way, the customer has a greater experience and you don’t lose money on wasted services and products.
8. Food wastage – throwing away unused food/supplies; food and beverage operations are notorious for wasting food at service time, but even more importantly not learning from their mistakes. Having the ability to look at all the statistics before (planning), during (operating) and after (results) will make a big difference. So that the next time the team delivers any service or event, they are improving their wastage and reducing the amount of money going down the drain.
9. Managing the workforce to reduce time and frustration as well as overstaffing; what’s the most common argument from an employee? ‘My hours are wrong’. The focus here is to get the employee to agree their hours upfront and even better, online. So that by the time the information gets to the payroll team it is already confirmed and the administration and frustration is removed (as is the extra cost the hotel is incurring for no real benefit).
10. Extending eProcurement into other areas of non-food buying activity; many hotels miss this trick – your eProcurement system should be able to extend into non-food and beverage purchases (chemicals, office, housekeeping, maintenance, etc) and also organisation overheads to control expenditure across the board.