Managing wage woes and cutting expenses
How business owners can find new ways to make money in the competitive landscape.
It’s certainly no secret that Australian cafe, restaurant and venue owners are faced with pressure from the growing costs of doing business, particularly when it comes to higher than ever wage expenses. The recent minimum wage increase of 2.5% has put a great strain on business owners. According to the Restaurant and Catering Association (R&CA), wages and staff costs can account for a staggering 44% of expenses. It shouldn’t come as a shock to know that allocating almost half of a budget to just wages is unsustainable in the long-run.
The good news for business owners is that there is light at the end of the tunnel. Whilst extremely competitive, the Australian hospitality industry is booming with opportunity. An IBISWorld report published in April 2016 showed that the industry has been growing by 7.4% annually between 2011 and 2016 with revenue totalling $5.3 billion. A key driver fuelling the cafe industry is the resilient demand from consumers who seek not only specialty, quality coffee but also convenience.
Owners can tap into this demand and growth but need to find ways to differentiate themselves in the market as customers are becoming more demanding and selective when it comes to their coffee.
So how can you stand out from the masses whilst also balancing the high costs of doing business? The key is to look for ways to cut expenditure and at the same time implement strategies for creating new revenue streams.
This can of course be easier said than done. Having external assistance from someone who is trained in business expertise to streamline processes and identify other operational concerns can make all the difference to your business. Di Bella Coffee is one supplier leading the way in providing such assistance. Their Account Managers are trained to help owners reduce overall business expenses and identify new revenue opportunities. Here are 5 suggested strategies cafe owners can implement to cut costs and earn more money.
1. Review your menu offerings: owners need to not only look at simplifying their menu options and scaling back redundant items, but also incorporating wage costs into menu prices and not just food prices. The R&CA 2016 Industry Benchmark Report indicates that menu prices have simply not been keeping pace with the cost of doing business. Di Bella Coffee Account Managers often assist business owners in how to calculate wage costs into menu prices, thus reducing the overall percentage wages take out of expenditure.
2. Expanding services: owners who continue to sell their products and services through the same mediums should start considering new opportunities as there are plenty of ways to capitalise on the growing desire for convenience. Utilising home delivery services for meals through companies such as Foodora or Deliveroo will open up a new channel for consumers to access your business through. Dedicated Account Managers can also help owners identify other opportunities for growth such as catering services, wholesale options as well as expanding into online and retail sales.
3. Industry memberships: business owners can seek assistance from industry bodies for a wide range of topics and issues and should utilise these services as much as possible. Di Bella Coffee customers benefit from a discounted membership with the R&CA and can use this membership for human resources, policy and legal advice. Doing so is much less expensive than hiring external professional advice as an individual operator.
4. Reviewing your workflow: using their extensive experience in the industry, an Account Manager can work closely with an owner to completely review venue workflow, operations and layout to identify areas for improvement. For example, you may benefit from moving your espresso machine in order to free up bench space which can then be used to create a retail product display.
5. The right people with right skills and the right attitude: look at the people you have employed and evaluate what they bring to the table and whether they are the right fit for the job. Your barista may have excellent coffee-making skills, but if their service skills are lacking, customers are inevitably going to turn away in search of something better. Account Managers are best positioned to offer training to develop customer service standards, improve hygiene and presentation as well as positive staff attitudes.
Surviving in this tough and competitive market is difficult, but not impossible. Having an experienced, external Account Manager to work alongside you and your business can make all the difference. The strategies for cutting costs and earning more revenue can be implemented by any business owner who is ready for the challenge.
PIE GRAPH Source: 2016 R&CA Industry Benchmarking Report
