Mind the Leaky Buckets
My first experience of the hospitality sector came when I was still at school, albeit in the 6th form. In the need for extra money to fund an ever-increasing social life I spotted an ad in the local paper for someone to help in the towns wine bar. Having successfully passed what can only be described as a cursory interview I began working a couple of nights a week. My duties mainly consisted of heating up frozen food in a microwave in a small upstairs kitchen, before then serving it to the customers. While it would be very easy to be dismissive of this approach, it has to be said that all the food was previously cooked on-site and that under the circumstances the food was of quite a high standard.
One of my ever-lasting memories was working on Monday evenings. To suggest that it wasn’t busy would be an understatement. On many occasions there would just be me upstairs, the owner behind the bar and more frequently than not only 2 or 3 customers during the whole session. It was so quite that I actually learned how to play backgammon with one of the Monday ‘regulars’.
When the business was sold about 6 months after I joined one of the first decisions the new owner made was to close on Mondays!
When I talk to operators these days, I often find myself thinking back to those times. I know many pubs, bars and restaurants hate to be closed as they think they are missing out on business. However, I do wonder how many operators regularly review their business to identify areas which may be costing them money?
The three golden rules
Regardless as to whether you are in the hospitality sector or indeed any other type of business, for me there are only 3 ways to make money; sell more, charge more or lower costs. The first of these is very easy for operators to get their heads around. The second of these most people get, although as I have discussed in the past many operators feel very nervous about how to go about this. In my experience it’s the final one of these which tends to be more of a blind spot.
That’s not to say that outlets don’t know what they pay for things like their beer, wine, spirits, food etc. it’s more about not recognising how money is draining out of their business almost un-noticed. These areas are what I tend to refer to as their ‘leaky buckets’.
Let me explain.
Too many cooks
Of course, it’s not just about cooks. As most operators know, getting your staffing levels right is one of the most important jobs which needs to be done each session. Not enough staff and you risk providing poor service, not to mention stressing out those who are working. However, having too many staff, be that front or back of house during a shift will be costing you money.
Venues who operate with bookings and reservations often find this easier to do vs. those who don’t. One trap that outlets sometimes fall into is that they get use to a certain pattern of trade and then they staff up to reflect that rather than regularly reviewing whether it’s still appropriate. This can often happen when the seasons or weather changes and your footfall drops below expected levels.
Going back to the beginning of this piece, as an operator you need to be very honest with yourself in terms of the level of trade that you can realistically expect at certain times of the day or on certain days of the week. Keeping a tight rein on this is a must if you want to be profitable.
You aren’t running a barn
Working with different hospitality businesses I regularly find myself having meetings in outlets well before opening time. During these visits it never ceases to amaze me how often I find that all the lights are on, despite their being no customers and in some cases the heating fully on and all the doors wide open. Even the best operators can’t have eyes in the back of their head, so they need to make sure that everyone across the team has the same understanding of where those leaky buckets might be. As a one-off these things aren’t issues but done day in day out then the money that could have been saved all adds up.
Although usually less of an issue with pubs, bars and restaurants wasting water can also be an issue, especially with so many of us now having water meters. A few years ago, while being given a tour around a microbrewery I couldn’t help but smile, in a good way, when the owner got very cross with one of his brewery workers who had just left a hose running. Watching him explain to the person that they were literally pouring money down the drain was music to my ears.
Take care of the pence
While many famous people have been credited with the phrase “Take care of the pence, and the pounds will take care of themselves.”, my research has suggested that William Lowndes (1652-1724), a former Secretary to the Treasury of Great Britain was the first to use it. I would probably build on the sentiment and suggest that business owners should look to develop a culture that is cost conscious rather than just being about cost savings. So why do I say that?
In my experience organisations and businesses that focus on cost savings can often find themselves looking to cut costs, which in turn can too readily become more like cutting corners or lowering quality. This can often lead to a race to the bottom. This can be particularly true when it comes to things which are customer facing.
By inspiring the whole team to be cost conscious I think you develop better behaviours and encourage people to look at ways to lower costs and save money but without compromising your standards or the overall customer experience.