Our Biggest Challenge: Rising Costs

Rising costs are affecting every one of us, but the hospitality industry is being hit especially hard. Food costs have risen almost 20% since March 2023, minimum wages went up on 1 April and energy costs remain a huge challenge. Most importantly, our customers are more and more likely to cut their spending on the very things that keep our businesses afloat to balance their shrinking household budgets. 

With the current economic climate continuing to threaten our financial sustainability, it is especially important for all sports and social clubs to review and measure all their expenditure lines.  

• Do you monitor weekly/monthly wages as a percentage of total outgoings? With the minimum wage increasing to £11.44 per hour for 21+ from 1st April, payroll could be as much as 30% of sales or more. 

• Have you increased prices to cover wages uplift from 1st April? Some major organistions in the hospitality industry have increased their average selling price of a pint by 13.5p or more to cover the spiraling payroll costs. Try to set weekly hours targets and a “model hours” plan, reviewing actuals against the targets on a monthly basis. This can identify areas of activity that can be reduced, expanded or altered to improve performance.   

• Do you have a Gross Profit % target? Do you know how to calculate one that will meaningfully benefit your bottom line? Costs from suppliers have increased and it is important that these increases are considered when setting prices. It is vitally important that a hospitality business knows how much profit it is achieving from its stock - simple spreadsheets can help a business to understand whether sufficient profit is coming from each product sold, and identify which products are costing your business and should be discontinued. The gross profit is the business benefit after subtracting all the costs that are related to producing and selling its products. 

• Do you properly and carefully manage your stock? There are Point of Sale products that can assist with stock management and control, but even without a costly new bells-and-whistles system there are simple, easy to apply practices and procedures that can be put in place in kitchens and cellars to minimise the loss of valuable stock.  

• Food prices have increased by 20% in the last year: has your menu pricing moved with them?  A business needs to be reactive to market forces. Does increasing the cost make the item poor value to the customer? Should you consider reducing portion sizes? Change the ingredients? Or remove the item completely?  

• Is your Team productive and how do you incentivize them? Your Team are your biggest asset. They can significantly increase your sales and reduce your costs, but if they are poorly led and under-motivated, they can cost your business. Training to encourage upselling and setting SMART goals for your team can help you identify and reward excellent performance that will improve the bottom line of the business.  

Club Consult could help you improve your profitability. With over 60 years of experience in the high-pressure Hospitality and Leisure industry, the team are primed to help any Sports & Social Club to survive and thrive. 

Let us help you, your members and your customers. 

To discuss how this can help you and claim your free one-hour consultation, please contact us on https://www.clubconsult.co.uk/