Building Strong Foundations - the key to supporting the hospitality industry

What measures can the hospitality sector take to save failing bars and restaurants? With lockdowns and social distancing long gone across the UK, it may come as a surprise to hear that there are 70% more bars and restaurants in ‘critical financial distress’ than at this point last year as quoted by Begbies Traynor.

After the promise of a spending boom after Covid, the tables quickly turned again with a Russian Ukrainian conflict impacting raw materials supplies, skyrocketing fossil fuel prices, rising inflation, and now droughts across Europe, the financial pressures on an already recovering industry are piling up.

So how can the hospitality industry mitigate these risks and have a successful recovery? Procure4 Food and Beverage Procurement Expert Gaelle Vivian provides her insight.

As Martin Luther King, Jr. once said: “You can't build a great building on a weak foundation. You must have a solid foundation if you're going to have a strong superstructure. Do you wish to rise?”

Ensuring solid business foundations are the building blocks for a successful organisation. I’ve outlined two key areas to support successful recovery and to mitigate the current pressures.

  1. Get Back to Basics

  • Develop a full picture of spend across the business. The best way to achieve this is by creating a spend cube, a multidimensional view of spend across suppliers in real time split across three areas: suppliers, business unit and category item. Once you have the full picture you have a starting point.
  • Ensure you account for both theoretical costs as well as true costs, such as wastage, spend should be real and not idealised. Maintain a detailed contract database across all suppliers and ensure you are aware of contract compliance. There may be opportunities for consolidation or loopholes.
  • Continuously review value for money: buy ‘fit for purpose’, review the marketplace for both product innovation, including value engineering, and commerciality. Innovation and changes in trends are happening all the time, ensure you stay  at the forefront and in a position to effect changes swiftly
  • Finally, ensure your relationships with suppliers are strong. Supplier Relationship Management (SRM) is crucial to supplier vetting and set up, contract negotiation and management, purchasing, distribution and collaboration.
  1. Seek Operational Efficiencies

  • There are often untapped efficiencies across organisations which can be identified and leveraged during challenging times. Cross functional process mapping will quickly highlight where these efficiencies lie enabling rapid changes, for example adapting the menu according to seasonality and market movements.
  • Limiting wastage through efficient stock management or streamlining can also be a quick operational win. Effective stock management provides greater insight for procurement and brings the supply chain full circle so is advisable for all organisations.
  • The last piece of advice would be to communicate, open communication channels can make or break organisations. Ensure clear communication with all internal and external stakeholders through a formalised plan. All business changes should follow a clear rollout, training and compliance plan.

With many hospitality businesses in full on recovery mode, ensuring the foundations are solid and stable must be the priority, all other efforts are the building blocks upon this. For professional advice and support from the leading Hospitality Procurement consultants speak to Procure4.

You will be surprised at how quickly we can create real value for your organisation through People Powered Procurement. Click here to contact us today.