How can I make more money from my hospitality business?

Written for the small hospitality business operator, this essay examines how to look at the resources you have in a different way — how to ‘laterally think’ and perhaps come up with some innovative ideas to improve a business without having to invest large amounts of money.

How many hours out of every twenty four hour period is your kitchen being utilised to it’s capacity? Most commercial kitchens have four hours out of the twenty four where they are in full flight, and another four to six hours where they are in preparation mode at less than optimum productivity — the other sixteen hours is largely wasted.

From a management perspective, this doesn’t make good sense. All the kitchen equipment you’ve paid a fortune for is lying idle, energy is still being consumed to run coolrooms, refrigerators, hot water systems and other equipment; and you are paying rent on the floor space while it is not earning you any income. Perhaps this presents an opportunity some of you can benefit from?

Learn to think laterally

Clinging to ‘the way its always been done’ will stagnate your business

Try a bit of lateral thinking. Ask yourself: ‘If all I had to make money was a commercial kitchen, and I wanted to utilise it on a continuous basis, what are my options?’ Let your mind roam free for a moment. Step aside from the traditional lunch and dinner operation and consider other options.

The logical place to start your thinking is to consider opening at other times. Early morning and late evening are the two commonest options. Let’s consider breakfast first.

When should I open and trade?

Can you develop a breakfast trade and will it be profitable enough to justify the hassle? I can’t answer that — it all depends on your location and circumstance, but I do know that I’ve struck a few restaurateurs who have beaten their heads against a wall trying to develop a lunch or dinner trade against the odds when there was a fairly lucrative breakfast trade to be had. Minimum staffing, low food costs, high margin. I mean, hey — it might only be blueberry muffins and coffee, but it can add five percent to the bottom line.

Perhaps you’re located in the CBD of one of a major city. Graph the population over a twenty four hour period in the surrounding 400 metres. You’ll see an interesting fact emerge. During the night there may only be 1500 people in the offices, at 6.30 in the morning the population starts to swell considerably as commuters make their way to work. By 9.00 am there may be 500,000 people within the 400 metre radius. At 5.30 the process reverses; by 7.30 you’re down to maybe 3,000 people. Not enough to sustain a profitable dinner trade, but breakfast from 7.00 to 9.00 am may have a potential customer pool of 150,000.

Cooperative marketing
Cooperative marketing . . . you and your suppliers are all in it together.

A six month marketing campaign centred around the theme: ‘Why sit in a traffic jam when you come in early, park easily, save time and have a leisurely breakfast while reading the paper?’, should do the trick. You could even do some co-operative marketing with the parking companies for an all inclusive parking/breakfast ticket. It makes more sense than trying to get people to drive in ten kilometres from the suburbs in the evening.

Think about trading when the competition is least

Late night trade also presents some opportunities. Draw another graph. This time graph the numbers of cars passing your business from 6.00 pm till 3.00 am in the morning. Overlay this with another graph showing the opening hours of all your competition within five kilometres. I bet you’ll find that there is a period between 10.30 pm and 2.00 am where your competitors have closed but there is still a brisk volume of traffic passing — and they’re likely to be hungry. I’ve always taken note the good trade some of our well known late night restaurants do.

There are some other good reasons you should consider late night trade — it can apply to some suburban and country centre businesses as well as those in the CBD. People are becoming more nocturnal and eating and drinking more at night, and suppers on the way home are becoming more fashionable.

Think long term

A small warning here, though. Building a breakfast or late night trade is not a short term activity — it takes at least twelve months, and will cost you initially. You can’t expect to just open your doors and let it happen, because it won’t. The number of times I’ve had restaurateurs tell me: ‘I opened for breakfast for a month, but we only did five or six people each morning, it wasn’t worth it’. Of course it wasn’t worth it! They hadn’t established a customer base to work from. You have to buy your initial customer base by allocating money for well conceived marketing activities, and persist for long enough to establish a viable trade.

How many hours a day is your kitchen idle?

Anyway, back to under-utilised kitchens — remember, thats where we started. If you can’t spread your operating hours by opening early or late, can you make something saleable in your kitchen and sell it elsewhere. A product, maybe — like pat?s or terrines, cakes, sauces and soups. Or a service — like boardroom catering, or cooking lessons. The possibilities are endless.

If this seems like too much trouble, can you sub-lease your kitchen during your down times? Can you form a symbiotic relationship with someone else so you share your kitchen facilities and reduce your overheads. Maybe the local bakery needs overflow production capacity at night, or the local council needs nocturnal production facility as part of their welfare program? Who knows what opportunities may present themselves? If you’re worried about keeping your stock separate, put a portable coolroom out the back.

The important thing is to think laterally. You’ve got the resource, and it’s not being used to anywhere near it’s full capacity. Instead of thinking of fifty good reasons not to try things, ask yourself: ‘How can I make this work better for me?’ You may come up with a gem.

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