Your catering arrangements may not be making a profit right now and subsidies could be to blame. Take a good look at your bill of fare and remove extra costs from the menu.
10 December 2009
What's eating your business?
Workplace catering is different to most other FM disciplines: it must consider profit and loss (P&L). But cost reduction is also a factor and your ability to achieve it will depend on recognising and then working this difference.
Most organisations need subsidies and the means to reduce these (a loss in P&L terms) can be found in universal business principles. So what will be your key moves Ð and in what order?
1) Sell more
Assuming that your service includes staff feeding, then reaching more people in your building has got to be your priority. More satisfied customers reduces per head catering costs. This could be achieved with better marketing.
Of course, selling more to the same number of people works too. In fact, giving existing customers more of what they want is the cheapest way to increase business. Contrary to belief, most people are looking for increases in quality, so investing in fresh food can even reduce your subsidy
.
Conducting a customer survey might reveal that you are simply selling the wrong foods. Selling more could easily equate to selling more of the things that your customers actually want.
Of course, this will vary with the seasons so move away from those hot, heavy roasts at the height of summer.
If your service includes the provision of hospitality to the rest of your business, then sell more of it. There is more to hospitality than simply transferring costs to other cost centres in the business. You will be saving money for the overall business compared to buying services from outside (assuming the same tariffs) because the profit margin of each transaction is retained inside your business.
2) Charge more
This is often an unpleasant task to contemplate, but could it be time to use the current economic environment to force through those tariff increases? Food inflation has crept up on us without most people realising it.
Should all your customers be paying the same amount for their food? You should look to introduce a two-tariff system if you have a customer group who are not entitled to the same subsidy support as others. And consider introducing premium ranges for your higher paid workers.
3) Increase efficiency
Monitoring of productivity is critical (£ sales per £ labour, or labour cost per meal, for example). Selling more food with the same staffing structure is the ideal. But when you sell more food, the amount of administration increases so make sure you invest in back office systems (online ordering and hospitality booking systems are examples).
4) Reduce costs
Look to how you can reduce your outgoings. Low hanging fruit need to go first, for obvious reasons. Can you really afford free fruit, free coffee or free lunches any more? And change the menus to include cheaper ingredients, but be inventive. Pasta every day is not an option.
Spend more on training. This might seem the illogical thing to do right now, but you need to recognise that the biggest cost in any business are its people. Therefore, reducing labour turnover in the catering team by investing more in the existing team will save on recruitment fees: and more besides.
Nick Parker is managing director of Bite Catering
5 steps to reducing your catering subsidy
1) Like all journeys, find your starting point and the point you trying to teach.
Are you looking for a 5 per cent subsidy reduction or a 50 per cent one? If you only have one month in which to achieve this, your options are very limited compared to if you had a year.
2) Make sure you donÕt dispose of your companyÕs sacred cows along the way.
Many companies see catering as a staff perk. Reducing your costs by making your chef redundant and replacing a handmade offer with cheap prepacked bought-in food never goes down well with staff.
3) The greater the degree of change the greater the level of communication required.
Food inspires human interaction. The more you change the food the more you need to interact with the people who eat it. Unfortunately, humans tend to jump to negative conclusions first and if you do not fend these off with an overload of positive news, customers will take their business elsewhere.
4) Make the exercise self energising.
Good business management should not be a feature of the credit crunch. It should be practised all the time. Hence the savings that you are looking for now depend on how efficient you have been in running the business in the past. To make good business a long term business, look to add an incentive to your catering contracts in order to get your caterer to be rewarded by subsidy reductions.
5) Be wary of undoing what you have just done or what you stand for.
Increasing your sales (and thereby reducing your subsidy) by increasing the amount of fresh food on sale is quickly undone if you then want to save more by halving the costs of employing trained chefs.
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