With rising prices, food cost issues are high on the menu for hotels across the country. Ex Accor & Radisson Purchasing Director, Austen Bushrod, shares some thoughts on discovering savings right under your nose.
Death by 1000 cuts
Firstly - let me start by stating there should be no room to compromise on the quality and service that your hotel provides. Your reputation is created by blood, sweat and tears of people in your business who have built it, often over many years. If you want to destroy that quickly, then there is no quicker way than swapping out products for inferior and cheaper items.
The second thing to quickly add is that by removing or dumbing down on the service you give, you are already in a downward spiral that it will be almost impossible to get out from - and you may not even know it.
I remember a long-running discussion in a hotel group about removing the biscuits from the bedroom. Sadly, they were removed, and on paper they 'saved' £40k. From a customer perspective, we had minimal complaints with no glaring rows at reception. After all, who is going to argue about a biscuit? As a single decision it probably did not deter customers, but rather just disappointed. I call it 'death by 1000 cuts'. You see, one action doesn't necessarily do the damage, but what if you combine that with the removal of facecloths, the hiding of pillows in the wardrobe, less bathroom amenities and one less sachet of coffee. The 4-star hotels started to be 3-star at best. This rot will take a while to set in, but everyone will eventually wonder why the hotels are struggling to maintain rate and why occupancy was on the decline.
Rarely will the cuts bee seen and identified as the cause. However, if you asked the customer why they don't choose a hotel anymore you can often hear the phrase, 'I don't know why, but it's not as good as it used to be'.
The problem here for the hotelier is that they lost view of their product from the customer's perspective. Works out that £40k group saving wasn't really a good move in the first place.
Cost Reduction
I'm not saying that cost reduction and quality management is something to ignore, but its like a very sharp tool that you should only use sparingly - and definitely wear your safety gloves! A cut in the wrong direction, and no amount of glue is going to fix it.
In fact, as a Purchasing Director I made a living and reputation from making such changes, but the key is to view every decisions from a customers perspective.
(N.B. Perhaps I will digress in another blog post about the 'operators' perspective also. Too many management decisions are made without understanding the operator impact - in effect making life more difficult for their teams!)
The holy grail of course is to make cost reductions that also improve the offer in the eyes of the customer. Ask any experienced Purchasing Director (preferably one that can remember site visits and not just what things look like on a spreadsheet) and they will have dozens of fantastic tricks where this can be achieved.
The Bananas
So. onto the bananas. If you spend time in your hotel - just watching and seeing what is actually going on, you will always find purchasing gold.
I once achieved a £30k group saving by changing the size of the bananas. I came across this picture a few days ago from my photograph feed a few years back. I was sat in a meeting room at a hotel near Heathrow and noticed a fruit bowl on the side that was part of our standard meeting room offer. Several thoughts popped into my mind...
We give our fruit away for free - whether at breakfast or in meetings there is no direct perceived value
The bananas are very big, so big that they make the other fruit look small
People usually only eat one banana
It turned out that the spec that had been set years before for bananas in the business was for extra large fruit that attracted a significant price premium. I doubt anyone at the time knew what that would even look like in a fruit bowl (a bit weird right?), or even thought about where or how they were consumed. They were just another line on the 'fruit' spreadsheet. Not too high up, as we probably consumed more apples.
Anyway, we made the change. We didn't go to small bananas, we just went to medium sized bananas - the same size that the customer expected to see. The bowls looked better, the remaining fruit looked bigger. The customer was satisfied with the size and even if they wanted two, they were more than welcome. Our saving was 20%.
Lessons
To summarise, there are 3 important points that I learned from the bananas, and ones that I regularly highlight to buyers in the hotel industry.
Get out and see what is actually happening - there are a lot more opportunities that exist outside of your spreadsheet.
Look at things from a Customers perspective and please don't think that just by being in your hotel that you are, or have, the typical customer experience.
Make cuts very carefully and track the impact of your changes. Don't be afraid to reverse a decision.
Now go and find your 'bananas'!
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Our HCC Purchasing Specialist, Austen Bushrod has held senior roles in the UK Hospitality Industry for over 20 years and is a long-term champion of improving the customer experience. He has a wide range of treatments available as well as One-on-One sessions.
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