In recent times hotels, restaurants and bars have started to look at food and beverage differently, the days have now gone where food and beverage is seen as service. It’s now a key source of revenue and profit for all operators, with some savvy operators achieving profit margins of 60% and higher which in the past was unheard of and beverage venues only achieving margins of upwards of 80%.
This has only be achieved by food and beverage being managed in a different way, thinking differently and looking at this side of the business as if you were a restaurateur, bar operator and event space owner.
Food and beverage costs are critical to the contribution of profit as costs can be relatively high compared to their sister rooms, with many food and beverage operations having high labour, food and beverage costs.
Many operators are facing a challenge now that customers are demanding more but are unwilling / able to pay more for beverages while our costs are rising, often in the highly competitive market these costs can’t be passed on to the customer. These costs include increases in wages / benefits to keep outstanding talent, product costs, taxes, etc.
So what do we do as operators to combat this? What we need to do is look inwardly for opportunities to reduce costs without negatively affecting the guest experience.
One of the key ways to do this is to control your beverage cost to help improve your margins these methods can help improve your beverage cost up to 2% or more.
I have identified 7 ways that can help achieve this goal
1.Ordering Minimise your inventory the key is to have just enough stock, excessive stock leads to wastage, over use, inventory shrinkage (theft from employees).
2. Inventory Control Have set par levels to help you order , do regular inventory checks many systems exist now that minimise this task and compares your inventory and sales so you can account for everything , this can be done manually or computerised, minimum weekly if not daily for high volume venues. Do you have processes and procedures in place to control inventory?
3. Costing When was the last time your products were coasted along with cocktail recipes? Calculate your optimal cost or potential cost so you know what profit you should be achieving and compare against your actual results , you likely will find a few surprises and will have to investigate as to why as there can be several reasons behind it.
4. Standard Recipes Do you have standard recipes for cocktails in place? You should have and if you don’t put them in place quickly. Check that the staff are actually following them or are they putting their own twist on your cocktails ( adding cost)
5. Owner / Manager Presence How often do you sit back and observe? Too often we are distracted and engaged so much in the operation we don’t step back and see what’s really going on! It may be surprising what you see look for staff giving free drinks to regulars or friends, over pouring, and other bad habits.
6. Draft Beer This can be very profitable but also can be an issue; so many times draft beer systems are put in and then not checked, resulting in a lot of wastage. Things to look out for include; how many pints are you getting from each keg does it match your sales? – install a draft beer counter, Is the keg room at the right temperature ?, are the draft lines insulated correctly ? – The wrong temperature by a few degrees can affect the yield you get from each keg, Consider the use of draft beer devices to reduce foam, tap locking devices for when service has finished.
7. Supplier Relationships build good relationship with your suppliers so you can negotiate deals and special offers which can help lower your costs, they also have targets / budgets to meet and can help you through employee incentives, free or reduced cost products if you don’t have the relationship and don’t ask you are missing out.
If you would like further information or advice on this or other topics please contact me at info@kewhospitalityconsultants.com and I would be happy to assist you.
