Malvern Inns—Current Challenges
I think we had all hoped that life would return to normal post-pandemic, but it certainly feels like the repercussions of the Coronavirus are set to last far longer than the virus itself. Lockdown gave us the head space to plan and give real thought to how we can improve our people, training and innovate our business. We were optimistic about our place in the wider economic recovery and the feel-good bounce back of the nation. But all of this has now been completely overtaken by a cocktail of challenges that have entered every area of the business. I don’t know whether the lack of staff, and in particular kitchen team, are the biggest challenge. Or, whether the constant failure of the supply chain is now taking more management time. The result of all the challenges is that, as a management team, firefighting has taken over and we are not spending enough time on innovation and growth. Before we know it, VAT and rates will be back to normal and we will have a cost base that has grown to a point where we are not making enough money. This article is a reminder of what we are now trying to focus on in order to drive our business for the long term. How quickly we will get round to them is a different question!
Recruitment and Training:
At the moment, our key priority is recruitment and training. Without the right team our senior team will be in the weeds. Currently we can’t meet the demand on most days—particularly on Sunday. So, being able to recruit and train to meet Sunday demand is a priority. It does seem to be getting better. The end of Furlough has triggered some people to look for work, but more importantly for us has been young people (students or school leavers) who are now wanting to get back into the workplace. This is building up our team one person at a time. Even yesterday one of my managers said 1/3 of the candidates turned up for an interview, which is a higher number than normal. Our real challenge, though, is how we up our game in the long term on recruitment. My guess is that how we have recruited historically will not be good enough for the future, and we will need to connect better with young people and be more persuasive about the personal benefits of some time spent in hospitality.
Pay:
Pay is a real conundrum at the moment. I think we are all worried about ratcheting up pay in the short term and then being unable to claw it back, but equally wanting to find the right level for the long term. I am really puzzled by the challenge we seem to face in tips. I don’t think that our staff actually understand what they earn when they add base pay and tips together, and that we have lost staff who think that they are being paid more in other jobs when the opposite is true. We are seriously thinking about whether we can morph our service charge into price and remove tips from the equation, but it is another big step that may then prove to be wrong. Pay matters and we need to help people understand the pay they already receive before piling more on the top.
Pricing:
As our costs go up, whether it be staff; electricity; VAT; rates; food; drink; or all of the above, we need to decide how much to put our prices up and when to do it. My straw poll suggests that most people are considering a 5-10% price rise currently, but we want to do it in a way that ensures we lose the least volume we can. So, a lot of thought needs to go in to when we do it and which lines we do it on. We also need to spend more time than we have looking for more meat light dishes, which will both reduce cost and fulfil the market move to a lower level of meat in our diet. But of all the 8 blokes I had dinner with yesterday, only 1 chose a meat light dish… chicken pizza!
Productivity:
The government seems to have made it very clear that they are not going to let in heaps of Europeans to help us out of our staffing challenge, so we are all going to have to find customer friendly ways of driving productivity. We have not yet gone down the self-ordering app or self-payment app road, but we will have to look at all the IT led productivity solutions and pick the right solution for our customers in time. We also need to address some of the basics that have slipped a bit, such as how well we deploy staff and how we are managing them to be as productive as possible on shift. This is the challenge of the firefighting regime.
The Planet:
We have just signed up to the Peach led Net Zero regime. I don’t yet know what it entails but recognise that we need to do the right things in the right way, and I know our customers will be supportive. I also think we can make some more steps in packaging waste and our use of plastics, but this will become more and more something we need to work with our local suppliers to solve.
Final Remarks:
Overall, our sales have held up pretty well over the last few months. In truth we have had the demand there—if only we could fulfil it. However, the looming cost moves means that we need to address our core profitability even more urgently, as we know the time from now until April will come quickly. Hopefully we will be fully staffed by then and have made enough moves on the four P’s: pay, price, productivity and planet to make sure we have maintained our underlying profitability.