NFS Hospitality technology solutions

By Luis DeSouza, CEO, NFS Hospitality

We all know that we’re in a really tough business climate and that it’s essential to boost revenue. So how do we deal with this – impose another increase in member charges?

Many clubs will be facing this question as we approach the end of a tough year, with potentially a tougher year ahead in 2009. In my view, you have two key levers to pull: better control of costs and more revenue generation.

The issue of managing costs tends to be very specific to the profile of your club, but the opportunity to generate additional income from the facility has significant common threads. So in regard to costs, I will simply assume that you are already using an automated booking system that provides reliable, real-time management information so you can cut admin time and speed your operation.

So let’s go on to revenue generation. Like many golf club operators, you may have a wonderful location, perhaps steeped in history, and probably with a stunning golf course that attracts golfers from far and wide.
So I will ask: do you view your club as a membership organisation or as a commercial venue? While your members may not see it as a venue, rather as a significant part of their business and social lives, for revenue purposes, thinking of it as a venue as well as a club is key.

Most of today’s successful venues use sales and venue management technology to identify and maximise the revenue potential of external banquet and events business. This can apply to your club as well. It is not difficult to get your club seen as a comfortable place for members as well as a thriving business that, on occasion, attracts appropriate external business. This means, of course, you would not schedule anything that disturbs the essential spirit of your club. No rock concerts, no graduation parties and most of all, no stag or hen nights!

Clubs that take this route and use good judgement are likely to reap the rewards that many other commercial hospitality businesses have secured in the last few years. And in the process you may actually serve your members better.

Two key benefits

For clubs that see themselves as both member organisations and venues and manage to get the balance right will achieve two significant things. First, member charges can be maintained at sustainable levels. Second, the club can generate the funding required to maintain the facility in a condition that members will appreciate. Not to see the club as a venue actually compromises your ability to deliver modest member charges as well as maintaining the services and facilities in a good state.

Making the transition

So how can you make this transition and take this great leap of faith in your ability to attract visitors beyond your membership base? First, consider what type of external commercial business is appropriate and the local competitors. Consider the local upmarket hotel, the museum or even the cricket club. Second, what can you offer the target market as a unique experience? 

As you may know, event planners in the events and corporate hospitality space are seeking to provide unique experiences, good catering and generally high standards in event organisation and service delivery. Some clubs already have what is takes to deliver a top quality event, so boosting external business will simply be a matter of making better use of existing facilities and services.

A key question:  where are your existing members holding their meetings, family occasions, parties and other possible event business? After all, generating more business from a known and close “ client” is so much easier than winning new business.
 
If you do not have suitable catering or other services in-house, consider bringing on suitable external providers. There are plenty of businesses that provide potentially valuable services in terms of generating revenue. For example, how about a partnership with a local catering or events company? This could bring your club new opportunities to use your facilities more, without changing your existing cost structure.  Consider a local theatre or music group as well. If they have a following, why not attract those people to your club for an evening event?

Don’t forget about the local publicity likely to accompany such an event. This can only be to your advantage – without incurring any extra cost.

The winning clubs will be those that can:

• reach out to the wider events and corporate hospitality market
• up their game in terms of external business development
• put in place the services, facility improvements and technology to make the club appealing to the demanding  commercial client.

If you can make this transition successfully, you will be in a position to offer your members a better facility in terms of range of services. Equally important, you are likely to boost your member retention rate and gain new members as well. Your community undoubtedly harbours many golfers who are not yet members. Let them see your surroundings and facilities at some external event – and don’t be surprised if they apply to join.

Credit crunch, food security, rising food costs, the impact of biofuels on food supply – an unrelenting flood of bad news for you, the restaurant operator. As you know all too well, many basic ingredients have risen dramatically in cost and even drinks are not exempt. For example, the cost of a Tequila Sunrise is bound to soar as some Mexican farmers sell their blue Agave crop for ethanol rather than exotic cocktails.

According to Hardens London Restaurants 2009, the average cost of dinner in London has passed the £40 a head mark for the first time. Restaurant bills are up 4.7% in the last 12 months for all establishments listed in the guide.

So with this double whammy of customers likely to cut back on dining out while food prices rise, how can you cut your costs?

What the experts say:

According to Peter Backman, Managing Director of Horizons, a food service consultancy, the latest figures show a worsening of inflationary pressures. In July, foodservice food input prices increased by 12.4% (compared with 9.3% the month before). The July figure for restaurants in particular was even worse, up by 14.3%.

However, Backman notes that these are like-for-like increases and make no assumptions about mitigating action restaurateurs have taken (e.g. menu re-engineering, changed suppliers etc) nor does it account for medium-term contracts which will be unwinding over the next few months. These factors will reduce the impact of inflation – and the longer term prognosis is for these pressures to decline over the next 18/24 months.”

Of course, it’s not just food that’s going up. Backman adds: “The rise in the cost of labour, fuel and other expenses is squeezing margins. However, the good news is that food commodity prices have stabilised over the last few months, so some relief is in sight for operators in the long term.”

According to Becky Paskin of Big Hospitality, using local and seasonal food has more benefits than cutting food miles and CO2 emissions. It can boost business.

Noting that top chef Gordon Ramsay has been promoting the use of local food for years, she says: “If chefs just put a bit more effort into researching the ethos Ramsay champions so much, they would uncover the huge benefits it has for the local economy, and for their business, particularly during the current ‘food crisis’”.

But, she asks, if everyone jumps on the local food bandwagon, how do you stand out?  Answer: by innovating. “Those restaurants that really embrace their produce’s ‘life story’ are seeing the biggest return for their efforts. For example, Tom Aikens papers his supplier’s details and background all over his walls and menus, giving diners the opportunity to really understand the field to plate process, as well as plugging his suppliers’ businesses.”

The full article can be read here.

David Foad, Editor, Eat Out and Cost Sector Catering magazines, suggests that operators grow their own food.

“Rather than simply passing on food price increases to customers and risk losing business, many caterers are looking at their menus and working with suppliers to re-specify certain products such as meat, for instance, to produce similar dishes but with slightly cheaper cuts.”

“There’s a growing trend among operators to grow some at least of the ingredients they need. This might be some simple herbs in a small garden or extend to seasonal vegetables if they’ve got a larger plot to play with.”

Another idea: exchanges. “Some pubs have traditionally offered drinks in exchange for produce from regulars (vegetables grown in allotments, wild produce, game etc) and there’s some evidence this practice is becoming more popular now.”

And another idea: promotions. “Some of the bigger pub chains have decided to slash margins and drive turnover by offering ‘dinner for a fiver’ deals that they hope will keep a regular flow of customers during these straightened economic times.”

Hardens table of restaurant bills

Based on a survey of more than 1.750 London Restaurants, Hardens reports on changes in the average price of dinner for one (average three-course dinner with half a bottle of house wine and coffee, cover charge, service and VAT).

“Average inflation figure” is the average rise of prices within the past 12 months.
Year, Average price, Average inflation figure2008–£38.78, 3.0%
2007–£37.72, 3.0%
2006–£36.82, 4.1%
2005–£35.79, 3.4%
2004–£34.79, 1.9%
2003–£34.44, 2.7%
2002–£–, 3%
2001–£–, 4%

What our clients say:

Gary Bennett of Langan’s

“We have seen food cost increases of around 4% since early this year, dairy being one of the biggest contributors. Cost increases have not typically been past on to our clients. We expect this blip in costs to stabilise by Easter. Reduction of wastage and serious conversations with our suppliers has helped us to keep cost increases to a minimum.”

Tim Bennett – Ed’s Diner

“We have seen some increases in food cost. Our main approach to cost management has been to work with our suppliers to look at product options and where necessary move to new providers.”

Hitesh Patel – Paperchase

“Many of our clients have seen food cost increases of up to 35%. We are helping our high end restaurants with better sourcing, product substitution and cost management made possible by timely reporting on key business ratios like food and drink gross margins.”

What do you say?

Do you cut portions, substitute less expensive ingredients, monitor favourite menu items more carefully, do more promotions?
We’d like to hear from you. Tell us what you’re doing to control food costs.

The winning contributor will enjoy a dinner for two at Langan’s in London.

Peter Grove, editor of online Mood Food magazine
says: “The British population is already eating ethnic foods on a regular basis and this is the largest growth sector within hospitality. Whilst overall growth will continue despite economic slowdown, individual success is a different matter. Figures already appearing this year show success for the value sectors, so value-for-money is now more important than ever.”

He adds: “Quality must not be sacrificed as the public will vote with their feet, so efficiency and adaptability are the watchwords for 2008. Labour saving devices, efficient management methods and greater use of the Internet can all help take up the slack, offering continual growth to the best and the inevitable end for the worst.”

Indian restaurants have come a long way from the days of the flock wallpaper and thick red carpeting, says Humayun Hussain, Editor of the UK’s leading Indian food and restaurant magazine Tandoori. Although change has been gradual, Madhur Jafferey’s seminal TV series on Indian cooking, greater availability of ingredients, and an overall sophistication of our food culture, has meant that the public has a more discerning palate. In addition, with more people travelling overseas and learning about new foods and cuisines, the advent of European restaurants modernising and celebrity chefs on our TV screens and magazines, have all played a part in influencing Indian restaurants to become more upmarket. Talented chefs have been brought over from India, who in turn have a greater degree of authentic and regional cooking, while also making Indian cooking more cutting edge, resulting in several being awarded Michelin stars. Aspects such as the decor, better wines and improved service have all added to making Indian cuisine one of the best in the UK.

The Tamarind Tree in Hertfordshire is only one of the UK’s many “ethnic” restaurants to invest in technology to speed service and cut costs.

This fine dining Indian restaurant has recently connected the back and front of house with Aloha EPOS from NFS.

According to owner Shobbir Ahmed, too much staff time was spent taking orders, running to the kitchen and writing bills,

instead of improving customer service and potentially increasing revenue. Also, without cash controls or management

information easily available, management could not judge which menu item was performing well or badly.

To streamline service and release staff for customer service, in July 2008 the restaurant installed Aloha, the leading EPOS system from NFS Hospitality. The three-terminal Aloha system includes kitchen printing which gives the Tamarind Tree the great benefit of accuracy. Chefs now get accurate information printed directly in the kitchen, rather than trying to read handwritten orders.

Aloha’s Delivery Module speeds take-away orders

“We are pleased that the Delivery Module will help us build a valuable source of client information and give our customers better service and more accurate order capture”, Mr Ahmed says.

For the full Tamarind Tree case study, go to: www.nfs-hospitality.com/tamarind-tree.html