Page 24 - foodservice magazine August 2019

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MANAGEMENT
THE DOs AND DON’Ts OF RESTAURANT REFURBISHMENT
A RENOVATION AND REFURBISHMENT OF A HOSPITALITY VENUE CAN COST A SMALL FORTUNE, SO YOU HAVE TO KNOW YOU’LL MAKE WHATEVER MONEY YOU SPEND BACK. TONY ELDRED SHARES ADVICE ON HOW TO APPROACH A REFURB, AND HOW NOT TO GO BANKRUPT IN THE PROCESS.
TONY ELDRED
FOOD SERVICE
For this month’s Management, one of my clients asked me to write a
piece about how to successfully refurbish a hospitality business. Right well, how much can we fit onto two pages?
Let’s go chronologically. First, ask yourself why you want to refurbish. Are you tired and ready for something new? Are you changing direction? Do you just want to keep in touch with the fashion of the day?
Then, the question you need to consider is how far should you go. I’ve seen businesses revitalised with as little as a coat of paint, new carpet, re-upholstered chairs and some secondhand kitchen equipment. But at the other end of the spectrum, I’ve seen people gut their entire property and do a complete re-build, inside and out, using the best designers and contractors money can buy.
Their justification is usually something like: “Ah yes, but look at the publicity we got.”
So, deciding the extent of your refurb and figuring out how to do it all boil down to one basic question: Where
can you spend the minimum amount of money in your business for the greatest return?
But beware – there is a hidden trap here. If you are
assuming that your venue’s decor or kitchen set-up are
the limiting factors on your profitability and success, best to make sure these are not
just assumptions. If you start spending money in the wrong places and these assumptions turn out to be invalid, you could end-up shooting yourself in the foot.
I’m very conscious of this because my company has been providing customer perception surveying for hospitality businesses for over 15 years. One of the main things I have learned from the results of these surveys is that the decor or environment in a hospitality business come a long way third in your average customer’s perceptions, behind the standard of human interaction and product quality. Before knocking down any walls, perhaps you would do better
to investigate investing your money in these areas first.
Whatever you choose, it
has to be within the bounds of commercial reality, or you will have a short and undistinguished career in hospitality. A complete refurbishment can cost a
small fortune and you will undoubtedly need to sell a lot of food and beverage to pay for it.
So how much are you prepared to spend and how long will it take for you to get it back?
Experienced operators recognise that refurbishment
is a predictable expense that needs to be done every few years. Rather than borrow to pay for it, they accrue and put aside a set amount every month to pay for the refurbishment when it falls due. The reason some foodservice businesses look tired is that the money for refurbishment is not available when it is needed. And don’t assume the bank will be forthcoming, because they probably won’t.
It is always a good idea to get
a professional to do the sums
(a feasibility study) on the cost effectiveness of your plans, and establish the projected return on your investment before you begin.
Furthermore, all refurbishment projects should have a safety margin built in, because Murphy’s Law seems
to be the governing factor in so many – whatever can go wrong, probably will go wrong – and your project will invariably take a lot longer and cost a lot more than what was first envisaged or provided for.
Put it this way: A much, much higher percentage of
Tony Eldred operates Eldred Hospitality, The Hospitality Management Specialists. Contact him on (03) 9813 3311 or at www.eldtrain.com.au
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