Cut the cost of business 

Everyone is feeling the pinch at present. The cost of living crisis is biting hard into Australians’ wallets. Customers are spending less, prices are going up and sometimes small business owners, especially in hospitality, feel powerless. But there are a few things owners and managers can control. It’s time to batten down the hatches, trim the fat, lock up the larder and look everywhere to secure better margins from the cash hitting the till.

Australia has some of the highest labour costs and stringent labour laws globally, which means employers need to be highly skilled and up-to-date. The old adage of looking after good staff and getting rid of deadwood still holds true. Losing good staff is expensive, so recruit well and reward hard workers appropriately. Be creative – it doesn’t have to be in cash. Train up the team so they can cover different roles if someone calls in sick or is ill. This saves on unnecessary casual staff expenditure and overtime. Use casual staff for less creative and more repetitive tasks, so full-timers don’t get burned out. There is excellent rostering and scheduling software that creates useful data showing some of the cost benefits of your staffing levels. Anyone who has done well in this game will tell you training is crucial and a culture of hard work and rewards is shorthand for success.

Food and beverage
Talk to your reps and suppliers to ensure you are getting the best price. Look for regular specials and, if possible, incorporate those specials into the menu to improve margins. Regularly review and update the menu to focus on high margin items and incorporate seasonal ingredients to control food and beverage costs. Accurate stock is essential. Integrated POS and inventory software can inform you about what should be on the shelves. Keeping tabs on stock and adhering to rotation schedules will reduce food wastage and stock loss through theft. Reading data from POS will inform you about which dishes are winners, both from a customer point of view and how your margins are.

It’s one of the biggest costs in doing business and, for some, the most important fixed cost to nail and stabilise. Rent is about that relationship with the landlord, and some are more amenable to negotiation. You can only ask the question when it comes to rent negotiation or stabilisation. For some businesses, it makes sense to use shared office space for admin or even outsource admin to third-party providers based overseas.

When it comes to energy, ring around, use savings comparing websites and find the best deal for you. Some state governments are offering cash incentives to research a better provider. Make sure the seals on ovens, fridges and freezers are up-to-date. Try induction for quick-boil water. Shorter, lower temperature cooking techniques use less energy. When it comes to lighting, switch to low wattage LED and use natural light in the dining room if possible. Make sure the fridges are set to the right temperature – wine fridges don’t need to be at 4°C. Is solar an option for you? Water is harder to reduce in hospo, but make sure there are no leaks, use cheap, low-flow valves for the washroom and make sure the dishwasher is the most economical on the H2O.

Marketing and advertising
You can still build the customer base and turnover during a downturn; it’s just how you tell the story. Work out what channels work best for you and invest your marketing and advertising budget there. Embrace digital marketing strategies, such as social media and email campaigns – these can often be more cost-effective than traditional advertising channels. Encouraging customer loyalty through rewards programs and optimising the online presence through search engine optimisation (SEO) are cost-effective methods of retaining business without significant acquisition costs.

By keeping an eye on inventory and stock rotation, food waste should be kept in check. Be vigilant about what comes back from the dining room – if patterns in uneaten food appear, your portions could be a little large or unbalanced. A slight reduction in what goes on the plate will help the bottom line. Wash, squash and recycle to reduce waste volume. If you can reduce volume, you can reduce pick-up frequency and save a little on the waste bill. Shop around with waste companies if you can and try and do some deals. As you know, small business is all about keeping an eye on the details and the big picture at the same time. It is hard work, and there are many talented and dedicated people doing it tough at present. But as the old saying goes, watch the pennies and the pounds will take care of themselves.

As seen in autumn 2024

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