Food & Beverage: A Year of Rising Costs: Make Plans for 2011 - By Ken Burgin

Big rises in food, fuel and energy prices are in the news - making operators and customers anxious.

Profitable Hospitality We need to focus on three areas: direct supply costs, customer experience and the impact on staff.

Costs go under the Microscope

Once upon a time, raising menu prices to cover costs was a sport; now it makes us nervous. Some industry voices say meal costs will 'have to rise' to cover cost increases, but this usually means opportunities for competitors and a further flight to cheap alternatives. We're in for another bout of belt-tightening.

Kitchen and bar profit margins have to change: Still using old-fashioned benchmarks? The cost of goods needs to fall by at least 1% to make space for the rise in fuel and energy costs. This is where chefs can earn real bonuses - finding new ways with presentation and less expensive ingredients. Recipe Management Software is more important than ever.

'Normal wastage' is out of date: Overpoured liquor, badly trimmed food, faulty portions, slow work and wasted chemicals. Cutting 60 tasks by a minute each is saving an hour of time. Once we accepted a certain degree of waste, now we don't.

Hospitality is an energy guzzler: Does the kitchen exhaust suck up your expensively cooled air? It's important to have the exhaust system supplied with the right quantity of 'make up air' so it doesn't drag it from the front of house. What about all those ice machines? There are dozens of costly inefficiencies that don't matter so much when energy is cheap, but hurt right now. Fridge seals, dirty motors and leaky taps - energy audits and control equipment usually pay for themselves in weeks.

Make life a little warmer (or cooler): Does the airconditioning or heating need to be quite so efficient? A rise or fall of 1 or 2 degrees won't hurt anyone. Make a story about it, and bring your customers onboard.

Watch for delivery charges: Remember free delivery? Now there are minimum orders, fuel surcharges and other extras. Have another look at minimum order quantities and par levels. Do methods that relied on 'a little and often' still make sense? Does everything have to be delivered within 24 hours?

Happy Customers are More Accepting

We make our money by giving people a happy, stress-free experience, so it's time to dial up the enjoyment.

Cheer up the atmosphere: Does your venue make people smile? Sometimes all it takes is iTunes and a little time to mix new music, or paint a wall with fresh colour. More than ever, we need strong 'magnets' to attract people back.

Talk and buy local: Do it sincerely, and tell the customers. They know you can't feed them 365 days a year from local farms, but love to see an honest effort. Is Perrier really so magical that you should bring it around the globe? Consumers are asking about 'food miles' - how do you answer?

Make it easy to do things online: buying books, giftcards and t-shirts, checking function menus and seeing room layouts. In fact, many customers would rather not talk to you - they prefer to purchase on the keyboard. Have you made it possible? Here's the new brief for web designers: make it easy for customers to spend without getting in their cars.

Explain and educate: Customers don't really want to hear about how tough it is, but there are ways to gently remind them why prices have increased, or 'free' now has a 'fee'. Brief your staff so they can defend price changes, and add an occasional short note to the menu, your blog or the newsletter.

Create some new staff heroes: Put the sales bonus on hold and create a new category of winner - the cost-cutting Energy Warrior, the Super-Server or the Cost Control Queen. 50 staff all coming up with one idea for improvement creates a powerful force for change. Invest in a cheap badge-maker for instant recognition - I bought mine 22 years ago and it's still going!

Profitable Hospitality offers management and cost-control systems (Manuals & CD-ROMs) for restaurants, cafes, hotels, bars and clubs. The systems are based on the extensive consulting and operating experience of CEO Ken Burgin, and enable busy owners and managers to set up complete operating and cost-control systems in minutes, not months. Profitable Hospitality also runs regular management training workshops in the areas of kitchen profit & efficiency, restaurant marketing and functions management. A free monthly e-newsletter keeps you up to date on the latest industry management issues. www.profitablehospitality.com.

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