Page 38 - foodservice news magazine Nov-Dec 2018
P. 38

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MANAGEMENT
WHAT OF THE
TONY ELDRED
FOOD SERVICE
Idusted off my trusty crystal ball for one of my clients the other day. The poor old thing
doesn’t get much use outside our office lately – very few owners and managers seem to plan their business activity beyond the next six months, and a disturbing number seem to wing it on a day-to-day basis. This particular client likes to look well ahead and asked me for an opinion about how the future might affect his business.
Our industry is being affected by the same economic forces
that have led to the decline of the corner deli bar and the local butcher. Businesses below a certain size can’t compete with the larger operators anymore; their costs are too high – and they’re disappearing fast. Over the last five years the margins
on food and beverage have been steadily eroded while the costs in running a business have steadily risen. It’s a lot tougher to make money than it used to be.
The long term trend is toward much larger hospitality businesses with economy
of scale and the financial strength to afford labour saving equipment and technology. You can already see it in our major cities – go back ten years and
I could count the number of 200+ seat restaurants in our big cities on one hand. Now they’re common. The trend is for bigger and bigger, either individually or in groups.
It’s not that some small hospitality businesses won’t survive, but there will be less
and less of them as a proportion of the total number – and their owners will have to be very clever to stay afloat. The name of the game will be table turning. In effect, if you can turn a 50-seat restaurant five times a day you have the equivalent of a 250-seat restaurant without the rent and overheads on the larger floor space, and you will do very well.
I see two main challenges in moving to a business of a larger size: First, large businesses require different management structures and systems to small businesses. You can run a small restaurant as a total dictator and
Tony Eldred operates Eldred Hospitality Pty Ltd, ‘The Hospitality Specialists’.
Contact him on (03) 9813 3311 or at eldtrain.com.au.
get away with it. It’s possible to be the host, waiter, accountant, marketing guru, purchasing officer, etc. – all you have to do is work 100 hours a week. Try doing all these roles in a 200- seat restaurant and you’ll die in the attempt.
Currently, it’s feasible for a small, under-capitalised business to survive and perhaps even do quite well, by the sheer drive and determination of the owner. This is the way most people I know have started in their own business, but it’s going to get harder and harder to get up and running as time goes by.
Consider the up-front capital required to establish a hospitality business now. Over the last ten years I’ve seen the establishment costs of new businesses steadily rise to the point where it’s becoming well beyond the capability of the average person to take the step out on their
FUTURE?
AS 2018 COMES TO A CLOSE, TONY ELDRED CONSIDERS THE ECONOMIC TRENDS AND DEVELOPMENTS THAT WILL IMPACT THE FOODSERVICE AND HOSPITALITY SECTOR IN THE YEARS TO COME, AND REVEALS WHY CONTIGENCY PLANNING IS A MUST FOR ALL BUSINESSES.
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