Are you planning to start, or do you own a hospitality business?
Well, you’re in the right place! One of our industry specialty’s is hospitality and we have hundreds of clients who run restaurants, pubs, clubs, cafes, bars, hotels, and motels. We work with all these businesses in the industry year in and year out, so we can see their pain points, best and worst, workarounds, and successful practices.
Through the years, we have unearthed a couple of tried and tested solutions to some of the most common mistakes in the hospitality industry. Here are several of them:
No Stock Takes
Many hospitality businesses don’t do stock takes because they think these are just a waste of time. It’s true that stock takes can be ultimately boring and time-consuming, but they are important! If you don’t do stock takes, you won’t know what your true gross profit margin is and whether you have issues with wastage, pricing, etc. If you don’t know or understand a
problem, how do you think you can fix it?
Hospitality businesses must have a deep understanding of their gross profit margin and constantly manage and monitor it. You can use a good POS system like Kounta or Vend to track your stock. However, having a good POS system does not end there. You would still need to do a stock take and measure any variables caused by wastage or spoilage for example, between your physical count and POS system.
To manage your gross profit margin correctly, you must know the benchmark you’re aiming for and this varies depending on the nature and type of your business. Restaurants, cafes, pubs and gaming venues have different benchmarks. Talk to our team of accountants if you need help in determining your business benchmark!
High Wages in restaurants, cafes, pubs
A chokepoint is a blockage that stops a business from achieving success and every industry has one. In hospitality, this is usually a trade-off between wage costs and good service.
The biggest cost in hospitality is stock purchases but payroll comes in close second. You need to manage this, especially with hefty penalty rates, payroll tax, Kiwisaver, etc. Nothing will plummet your business faster than not managing your wages! You must identify the right “wages to sales” benchmark for the different departments of your business – wait staff, kitchen, etc.
To control your wages, you can cost your roster by working out the wages of those who are rostered and comparing this number to your expected revenues for the same period. If the wages exceed your benchmark, you would need to find out where it’s coming from and look for a solution. In hospitality, revenues can be predictable, so costing your roster is very
doable. With cloud technology, you can even choose among various software packages to help you with your roster.
Another important thing to do in hospitality is keeping venues and fit-outs up-to-date and not doing so is a common mistake! Customer satisfaction is 25% based on a business’ premises and in our experience, those who invest in their venues tend to have higher revenues and profits than those who don’t.
Why not allow a budget for refurbishment and fit-out every five or eight years? Review your financial management and make sure you can fund this for better chances of long-term success.
Want to know more? Flick us a message or give us a buzz and we can talk about our years of experience with our hospitality clients!
Your Outside Team
Address: Level 2, 182 Vivian Street,
Te Aro, Wellington 6011, New Zealand
Mail: PO Box 24-457, Wellington 6142
Phone: 04 889 2975