How to create a cutting cost mechanism in hotels and restaurants: “Talking numbers”

For ages, lowering cost has been a priority for every management team in the hotel and restaurant industry. Most management teams spend time close watching expenses such as:

·     Labor (The biggest expense in any hotel or restaurant establishment)

·     Food cost

·     Beverage cost

·     Operational expenses

·     Miscellaneous expenses

·     Capital expenses

·     Procurement

Although this is a traditional managerial approach to lowering costs, they fail to practice employee empowerment. While most of them use it as selling pitch to attract talent, others practice it with limitation.

Employee empowerment is not just putting a certain budget for each employee to cooperate with an upset guest, nor is it an incentive to the staff to entertain a guest. Empowerment is a philosophy that needs to be adopted across the board and a daily task that management ought to enforce.

The time has come to adopt this powerful philosophy and use it to cut cost, but how?

Operational financial knowledge is the missing piece in the cost saving puzzle. General management, including the financial controller, need to develop training programs to educate staff members on how to read and understand a profit and loss statement.

Staff should know how to talk numbers too, and they should believe that they are as important as the management team to make a financial decision. Employees are not just robots being guided by their job descriptions; they are creative, helpful, and trustworthy.

If an employee knew how much his or her uniform costs and how much it costs to clean, would they still throw it in a bin the way they use too? If they were educated on what type of linen sheet they are using for the guest’s bed and how much it costs (local or imported) would they handle it in the same manner? For example, when an employee is educated on operational and capital expenses and how much management suffers every year to convince owners to increase capital expenditure for new equipment, they will understand the implication of their carelessness and start handling the equipment with silky gloves.

Your staff should be equipped with financial knowledge to be able to leverage their creativity and cost saving ideas. Only then can you say that you are empowering your staff and turning them into an added value. When the gap closes between management and staff, they will become one soul and will be heading in the same direction.

Management should stop staring at their computer screen and scratching their heads to save costs. Instead, they should start spending time with their staff by teaching them how to read a P&L and to talk numbers. Management should encourage, motivate, involve, and value their employees. In the end, they will reach the cost saving goal to beat budget and forecast.

By: Hani Rifai