The control of food and wage costs are essential in the catering industry.
It was “hit home” to me only last week when I went into my local pub and the price of my usual ale had increased by 10 pence. Initially I did not notice the price rise as the need for a cool English ale at the end of a long day does funny things with ones mind and the ability to think rationally. However, the other locals who had by now got past the euphoria of the first pint and were now ordering their second round, realised they were paying more than normal! A whopping 10 pence more than normal!
There was pandemonium. Regulars who have been drinking at the same place week in and week out for years were actually considering switching allegiances and going to a pub in the next village. Others were slating the penny-pinching landlord!
I quietly sat back and savoured my very good pint of ale and considered the situation with my Harris Restaurant Consultants hat on. After not a great deal of thought, I felt incredibly sorry for the landlord and immediately understood the dilemma he was faced with as many others in our industry - as the costs of running a business go up, at what stage do you have no other option other than to raise prices?
Costs have spiralled out of control over the last year or so and show no sign of ceasing or even slightly improving. One of the main issues has been the National Minimum Wage that seems to increase on an almost biannual basis. Just doing some simple sums, my landlord will have to pay an extra £50 per week in wages. In itself, £50 does not seem like a great deal but the money has to be found from somewhere and when budgets are tight anyway, this is not easy.
The same landlord had a conversation with me from across the bar a few days earlier that it is cheaper for him to do a weekly shop at Tesco’s for some of the kitchen food staples than it was to have them delivered from suppliers. Who would have thought that it would ever come to this! But, the suppliers face the same issues as the operators all over the country. Their wage costs are increasing and their expenses (fuel in particular) are going up. It is simple common sense that at some stage prices have to go up too.
Sadly there is no simple answer. At Harris Restaurant Consultants we like to think that raising prices has to be the very last resort. In the first instance it is more important to make efficiencies wherever possible and manage wage costs incredibly tightly and alongside these cost savings think very carefully about strategies to increase revenue. There is never one simple solution but more the case of lots of small things that can be done to make improvements across the board.
Harris Restaurant Consultants specialise in monitoring and assisting operators in managing the costs of the business - wage and food costs in particular.
For assistance in controlling costs in your operation contact Mark Harris directly or complete our contact form for Mark Harris to make contact.