The Professional's Voice

Technology can help offset introduction of national living wage

The forthcoming introduction of the national living wage on April Fool’s Day 2016, which pushes up the minimum hourly rate for workers aged 25 or over from £6.70 to £7.20, is no laughing matter for the hospitality sector.

The industry is bracing itself for one of its biggest challenges in recent times. Several operators, including Whitbread, who owns Premier Inn and Costa Coffee, have gone on record saying they will have to increase some prices to accommodate the changes.

A 3% higher wage bill hike 

Whitbread is not alone.

Surveys published last year by the Resolution Foundation and M&C Allegra Foodservice reveal around three quarters of hospitality operators feel labour costs will be adversely affected. A third of operators claim it will have a significant impact. Another report by property advisor Christie & Co anticipates a 3% higher wage bill hike than the current median salary in the restaurant sector.

On the plus side, over 60% of leading chief executives questioned in the M&C survey believe the new national living wage legislation will boost staff retention and recruitment.

Improving productivity would be a priority

According to Resolution, three out of ten employers across all business sectors in the UK would look to recoup much of the additional costs through increases in productivity. Whitbread Chief executive Andy Harrison is one boss looking to do just that, saying decisions about what prices would be increased had not yet been made, and that improving productivity would be a priority.

From our own conversations with our clients, the percentage number of businesses wanting to increase productivity is much higher within the hospitality sector.

Although our multi-site clients instinctively always want to deploy technology in its widest sense to improve efficiencies, the new national minimum wage provides an extra incentive: (technology in its widest sense means not only embracing core EPOS-based hospitality management solutions but also integration with other technology apps to add functionality and value).

Rationalised product offering leads to noticeable cost savings

The benefits are obvious. Avoiding duplicating data entry provides remarkable labour efficiencies and staff cost savings. Similarly, creating bespoke automated reports saves accountancy staff valuable time and energy compiling data and producing Excel reports, allowing them to focus on other activities.

We have numerous cases where changing reporting methods improve working practices. For instance, we worked closely with the Inception Group’s management team to create a series of bespoke business intelligence reports to help improve the group’s performance. Inception’s Senior Operations Manager, Thomas Foulser said the reports have helped them identify the reasons for stock loss, have given them a much better understanding of best sellers, and allowed them to manipulate menu layout and pricing to maximise profitability. Additionally, they have also managed to implement a clear and more efficient ordering and invoice reconciliation system using StockLink. The increased clarity of the cost breakdown of products has allowed Inception to rationalise its product offering, leading to noticeable cost savings.

Speed of service 

A similar approach has been adopted with Rick Stein’s 10 UK food outlets where a broad range of operations had at one time four different EPOS systems. These have been consolidated into one IBS solution eliminating duplication of data entry and providing management teams with bespoke reports relevant to each business stream. Martin Glinski, Rick Stein’s Head of Operations, is also keen to develop up-selling opportunities via loyalty and gift card schemes to reward and thank customers.

One benchmark for productivity is speed of service, especially in the food-to-go sector. Last year we installed EPOS-based technology in Itsu’s UK stores. Feedback from the client said its stores have saved seven seconds per transaction compared to their previous system. Wave and pay for transactions under £20 is even quicker, taking literally three or four seconds.

We have also added new products to our portfolio to give clients even better tools to do faster business. A new kiosk service style, launched in 2015, complements our table and QSR touchscreen, simplifies purchasing and speeds up service and food delivery. It gives hospitality operators queue-busting self-service areas similar to major UK supermarkets and multi-national food-to-go brands.

Outline how technology can help them achieve their goals

With April just around the corner, there is no better time or incentive to review how your technology can work more effectively for you, if you haven’t done so already.

At regular client review meetings we take a pro-active response to challenges like increased staffing costs. We’re always upfront with clients about what can and cannot be achieved together with any cost and timescale implications. If new functionality is to be added or written, we also make sure installations and training are meticulously planned to ensure the minimum disruption to day-to-day operations.

This is very much a two-way process. If clients, and potential clients, share their ambitions, strategies and objectives with us, we can outline how technology can help them achieve their goals. Then the secret to the whole process is advance planning and allocating sufficient time and resources to make ensure technology genuinely improves productivity and efficiencies to minimise the impact of the new national minimum wage.

ENDS

Gareth Powell is managing director of Intelligent Business Systems (www.ibs-systems.co.uk). He is one of the most experienced faces in the EPOS industry. He’s previously worked with Pizza Express and Pret A Manger – and currently works with the likes of Bath Ales, Bone Daddies, EAT, Franco Manca, GBK, Harry Ramsden’s, Inception Group, Itsu, Mark Warner, Peach Pub Co, Pod, Revolution, Spudulike and Vital Ingredient.  IBS provides multi-channel, cloud-based EPOS-driven solutions, including front of house and back office management tools and online shopping, CRM, loyalty and room-booking add-on options.

 

 

 

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