Hospitality industry is not for the faint hearted, it can mean long hours, hard work and require thinking quickly on your feet. If you get it right the reward can be the smiles on your customers faces and a good financial return.
- Top of the list – This is what the industry is all about. Just meeting your customers expectations and they will likely come back. Provide exceptional service and they may tell someone else (this is how you grow your customer base). Provide poor or bad experiences and they will tell a whole bunch of others. The latter is even more prominent today with social media and rating sites.
- Staffing Critical to creating that great customer experience will be your team. Getting your rostering right is equally important, wage costs are often the biggest variable cost. Having too many staff will cost your bottom line, being short staffed and the customer service will suffer. Keeping an eye on your figures will help make good decisions. You should be reviewing your wages as a % of sales at least weekly or even daily. When working out rosters start with your prediction of daily income for the week then roster team members to meet the expected demand. Keep an eye that the overall cost % is in line with your target.
- Food & Beverage costs Know your cost of sales on each item you sell and overall average based on your sales mix. For beverages simply divide cost by the selling price (make sure to exclude GST). Plate out meals, measuring and pricing the ingredients. The same goes for baked items. Divide the cost by your sale price to get the cost of sales %. Knowing what your cost of sales are will help with setting your pricing. This is also where you can get creative, work on putting together fantastic food that looks, smells and tastes great but doesn’t rely on expensive ingredients.
- Breakeven and overheads Review overheads systematically to trim out any unnecessary cost creep. If you know your wage and food % costs are it’s relatively easy to work back to your break even sales point to cover your fixed overheads. Remember to build in some return for your hard work too.
I started my career working in the Hospo industry. I enjoy working with passionate hospitality business owners and helping them make good business decisions. Give me a call sometime for a chat and coffee.
Greg Verhoef Chartered Accountant