Projects are picking up, people are patronizing restaurants again and travel plans are resuming. It’s easy to be optimistic right now. But, Daniel Bendas, managing partner of the hospitality consultancy Synergy Consultants, encourages a cautious approach.
With inflation rates on the rise, looming threats of higher interest rates and increasing prices for food, equipment and supplies, the industry can expect a challenging economic environment for a while. As a result, it’s important not to fall back into any old habits and instead, Bendas says, “get ahead of everything and prepare as if you are getting ready for a recession or are worried about future business. That means maximizing sales while reducing overhead and taking a closer look, line-by-line, at the P&L.”
As an operations and business consultant, Bendas does this for his clients, and he encourages similar consultants to do the same. But even if you’re strictly a design consultant, you can take these proactive steps for your own business — large or small — and, as you know, there are ways to specify certain equipment and design spaces that will manage costs in the future.
Here, Bendas offers some more detailed tips to protect your business (or help your clients protect theirs) and get a better set up for future success. As you work through some of these suggestions, always remember that, in conjunction, efforts to build sales and average checks where possible are key. “However, any cost-cutting measures must not detract from a quality team and guest experience,” he says.
Review all expenses, line item by line item.
This seems like a no-brainer, but in foodservice, it’s incredibly impactful. “We all know the biggest expenses are food, beverage and labor costs,” Bendas says. It’s one thing to keep food costs at a certain percentage, but there are other places hospitality businesses can look at reducing their costs. “You want to look at how to save pennies without sacrificing the quality on the cost of goods,” he says. That might mean switching the type of packaging or cleaning supplies used, shrinking the menu, cross-utilizing ingredients and maintaining an equipment on-off schedule to manage utility costs.
“I think food prices will continue to go up so to prepare for that, now is the time to take a hard look at other expenses and look at less expensive alternatives,” Bendas says.
In consulting, designers can help clients reduce long-term costs through ergonomic design and maximizing every square inch of space to ensure nothing’s wasted, while also maximizing sales by building in the right amount of seating and space for alternative revenue streams such as carryout and catering.
Consider a declining budget model.
“We recommend our clients use a declining balance process for different expense categories,” Bendas says. For example, if there’s a budget of $1,000 to spend on disposables and cleaning supplies, record every purchase to see where you are so you don’t go higher than the budget. It doesn’t have to be a fancy system, either. “This could be a very simple excel spreadsheet,” he notes. You can also calculate it such that, say you have a budget of 30% for food costs and you’re projecting 100,000 in sales, then the budget is $30,000 for that category and you subtract each purchase. “It helps you [and your clients] think before you buy so you don’t overspend and it also helps inventory management,” he says. “Oftentimes, our clients have more product than they need and are tying up cash in inventory that they’re not turning as fast as they should.”
This is often the case in the bar. “Alcohol takes up a lot of dollars if it’s just sitting on shelves. especially in the bar,” says Bendas, who encourages his hospitality clients not to fall prey to convincing salespeople offering discounts on bigger cases of liquor.
Be transparent and engage with your staff regarding budgets and costs.
Get the whole group involved, whether you’re encouraging your operator clients to do so or you’re running your own design firm. At the restaurant level, staff can often be unaware of the replacement costs every time a glass breaks or forks are accidentally thrown into the trash. “If people know what these costs are, I have found they tend to be more caring,” Bendas says. “It helps to be open and transparent and even [show the budget] to the whole team and ask for suggestions. Many operators don’t want to do that because they’re afraid of showing too much, but I found if you get your staff involved it makes them more engaged. We have done strategy sessions with clients and have asked servers and kitchen staff to attend because they’re in the trenches day to day and can offer a lot of great ideas on how to save costs or improve sales.”
Leverage technology to enhance efficiencies and automation.
You’re probably well aware of this by now. New technologies can help dramatically improve efficiencies (and reduce time, effort and costs) on the operations side when it comes to scheduling, production planning, inventory management, training and more.
On the foodservice design side, investing in multiuse, high-volume, highly programmable and smart equipment can also enhance efficiencies and reduce costs. “There are many pieces on the market that can help mitigate labor costs,” Bendas says. “These are important recommendations for customers looking to save money over time.”
Improving the overall work environment in kitchens can also save costs indirectly in the long run because it helps improve the work environment, leading to improved team morale, and reduced turnover and training costs. “There are ways to make kitchens a less hot, greasy, dirty and dangerous place to work,” Bendas says. While investing in better ventilation systems is just that — an investment — over time it improves employee morale and cuts down on the need to constantly train new staff members.
Here’s where ergonomics comes back into play: “Does the design make sure employees do not have to constantly bend down to do their work; Is there a sufficient number of service stations in the dining room?” Bendas says. “Any way we can help operators have a better environment for their team, it helps with morale and reduces turnover.”
Take a preventative approach with everything.
You probably already harp on your clients to invest in well-planned maintenance programs for their equipment, but in a time of looming economic concerns, now is the time to double down on those efforts. “I’m seeing more and more affordable solutions to help [our clients] manage repairs and maintenance,” Bendas says. For one, more pieces are being built with sensors, alarms and other forms of notifications for when refrigerators drop in temperature or when equipment pieces go down. The cost of wasted food because a walk-in door was left ajar too long will more often than not outweigh the upfront cost of purchasing a piece of equipment with temperature sensor capabilities. “You have to weigh the upfront cost against ongoing benefits,” says Bendas, who has found that prioritizing these pieces and including preventative maintenance plans in the budget saves dollars over the long run.
In this day and age, cost management is and will remain the name of the game. “It’s all about how to operate systemically and stay on top of every penny that you spend,” Bendas says. That goes for both foodservice operators and the team players who serve them.