Know your figures inside out

I am obsessed with figures. 

I find comfort in the fact that figures legitimise ideas I put into place. 

Figures will at the same time expose the raw reality.

We indeed live and die by the sword. Especially in our current climate.

At the end of the day, nothing matters more than the figures. 

You need to live and breathe figures and really understand and listen to what your figures are telling you.

Over the past few years I have experienced, unfortunately more than once, business operators not putting the needs of the business ahead of their own ego and desire for recognition. 

It's a fine line but at the end of the day business is business. 

Our industry has so many variables compared to other industries, unique to us, and not always understood by non hospitality folk. 

This can become our Venus flytrap. 

Sometimes in the pursuit of excellence and an ideal, we let passion override logic. After all we are all passionate about what we do. 

We can too easily get so caught up in our own crusade that we fail to recognise the warning signs.

Even when we are warned point blank to our face. 

We don't listen. 

We know better. 

"Things will turn around."

"Customers and the media don't quite understand us just yet, but they will and the revenue will turn around."

"We are just so misunderstood.."

As I write this, the New Zealand government has announced a minimum wage increase to $20 an hour.

I’m all for raising the living standards of people in the hospitality industry. Not only in New Zealand, but worldwide.

After all, I spent many decades being working poor at ridiculously low hourly rates in order to gain valuable experience. 

We were early adopters of the Living Wage Movement in one of our restaurants in New Zealand. The current New Zealand Living Wage hourly rate is $22.10.

I am a firm believer in having high performing, multi-skilled, small, well paid teams. That is the model we operate on.

In my view New Zealand is one of the most difficult places to own and operate a hospitality business. 

With the borders still closed, the New Zealand market is fairly small and is very price sensitive.

The price that the average guest in New Zealand is willing to pay for a meal has not really adjusted in line with the increased operating costs.

In some ways, from a global perspective, it puts us at an advantage as the hospitality industry creeps to a post Covid reality of small teams and adjusted revenue levels.

One of the biggest concerns is and will continue to be how to attract, train and retain a skilled workforce to deliver on the expectations of the market in this updated business model.

With the minimum wage being $20+, the whole structure of how a restaurant is run is changing.

If your Sous-chef has been working in the industry for 10 years and is on $24 an hour and you bring in a kitchen hand on $20, it is their first job with no previous experience, how does that affect your Sous-chef?

Because we run on a percentage of sales to determine wage cost budgets, the minimum of $20 an hour may require a lesser number of people in the kitchen.

Here in lies the conundrum.

You need to have a certain amount of staff on shift to open the door.

Depending on your offering, cafe vs restaurant, you need varying skill sets for the food you are producing.

Add in the variable of volume and operating times.

And your poor Sous-chef is suddenly doing the work of three people at $4 an hour more than the kitchen hand you just hired in their first job with no experience.

The Sous-chef can jump in at anytime and do the dishes, which they usually do, but the favour can not be returned by the new recruit when your Sous-chef needs help in the middle of service.

This then leads to the conversation of productivity and the real cost of practical on the job work experience and training or lack there of.

If you get the mix wrong in the your wage cost, then the flow-on effect of cashflow will affect every aspect of your business.

And that is why you need to really understand your figures inside out.