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Craig Macfarlane Leaders in Business Innovation

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Managing a successful hospitality business <ul><li>“ Consciously check whether your people, processes and partnerships are working for you, and not against you” </li></ul><ul><li>How can we all achieve this within our businesses? </li></ul><ul><li>Today I aim to provide an insight as to how I have applied key business practices with the purposeful intention of adding intangible value </li></ul>

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Managing a successful hospitality business <ul><li>People </li></ul><ul><ul><li>Do they understand and support your values, have training and confidence for sound judgments when dealing with your customers </li></ul></ul><ul><ul><li>Does the way your staff conduct themselves best represent you, your business and brand? </li></ul></ul><ul><li>Processes </li></ul><ul><ul><li>Relevant or redundant? </li></ul></ul><ul><ul><li>Are your workplace processes and systems fit for purpose; do they have an effective and positive impact on the productivity and profitability within your business? </li></ul></ul><ul><li>Partnerships </li></ul><ul><ul><li>Stem from formal and informal, may affect your reputation and level of trust someone has in you </li></ul></ul><ul><ul><li>Not only relate to legal, but include associations, professional bodies, individuals, companies, brands and joint ventures </li></ul></ul><ul><ul><li>Are such partnerships helping or hindering you or are there others you should be associated with? </li></ul></ul>

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We need to better position ourselves as managers and business owners … why? <ul><li>Hospitality employers and managers have to take responsibility for shaping the future of our industry </li></ul>

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Who are we responsible to? <ul><li>Directorship </li></ul><ul><li>Shareholders </li></ul><ul><ul><li>Business partner(s) </li></ul></ul><ul><li>Financial institutions </li></ul><ul><li>Employees </li></ul><ul><ul><li>Terms of employment </li></ul></ul><ul><ul><li>Staff </li></ul></ul><ul><li>We have the opportunity to demonstrate our ability to manage profitable outcomes within our businesses and thus enhancing our reputation as individuals and as an industry </li></ul>“ With responsibility goes autonomy and with autonomy responsibility”

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Leadership and organisational culture <ul><li>What is leadership? </li></ul><ul><ul><li>One aspect of management </li></ul></ul><ul><li>What is organisational culture? </li></ul><ul><ul><li>Our values, beliefs, ideas and ideals, behaviour and norms </li></ul></ul><ul><li>Should our industry be any different? </li></ul>

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Top 10 characteristics of successful leadership in a productive culture <ul><li>Humility Without it, a leader can’t listen properly and can’t learn </li></ul><ul><li>Learning You can’t lead if you’re not learning all the time </li></ul><ul><li>Action A leader must be decisive and act promptly in any given situation </li></ul><ul><li>Communicative A leader’s job is to simplify complexity and give clarity </li></ul><ul><li>Inspiration and Motivation A leader has to be able to sell and has to find a way to the heart as well as the head </li></ul>

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<ul><li>Confidence A leader must be able to inspire confidence to internal and external customers </li></ul><ul><li>Consistent A leader doesn’t surprise their own people </li></ul><ul><li>Self-awareness A leader has to know themselves, their staff around them, and their own weaknesses (there is a big difference between team work and team performance) </li></ul><ul><li>Direction and vision Focus on key directions amidst day-to-day distractions </li></ul><ul><li>Values Example is not the main thing… it’s the only thing </li></ul>Top 10 characteristics of successful leadership in a productive culture

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Global financial crisis! <ul><li>As a result, we have seen extreme tightening of credit and a subsequent lack of funding and access to capital </li></ul><ul><li>Never more so has “cash been king” </li></ul><ul><li>The GFC constricted economic growth and business activity with extreme caution and risk averseness becoming the key operating models </li></ul>

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How does this impact on businesses? <ul><li>As a result of a recession down turn we all become significantly more discerning about how we spend our dollar </li></ul><ul><ul><li>This includes our customers </li></ul></ul><ul><ul><li>This will continue as disposable income becomes more precious </li></ul></ul><ul><li>Innovation </li></ul><ul><ul><li>Think about how you can innovate or do something different from your competitors, this could be around atmosphere, service, menu offering, pricing, training, sustainability </li></ul></ul><ul><ul><li>Create your unique “Point of Difference” </li></ul></ul><ul><li>Complacency </li></ul><ul><ul><li>Can signal the end of your business </li></ul></ul><ul><ul><li>In sporting terms, you’re only as good as your last game </li></ul></ul><ul><ul><li>“ Reputation, quality, delivery and performance translates to value in your business” </li></ul></ul>

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What makes a good business model? <ul><li>Successful businesses and successful operators monitor Key Performance Indicators (KPI’s) very closely. </li></ul><ul><ul><li>How do we set KPI’s? </li></ul></ul><ul><li>There are critical measurements of achievement against budget and strategy, any exceptions should trigger alarm bells and investigation </li></ul><ul><li>The underlying principles of successful business performance are relatively similar – irrespective of industry, scale or geography. </li></ul><ul><li>Invariably they will involve </li></ul><ul><ul><li>Vision – immediate, interim, long-term </li></ul></ul><ul><ul><li>Strategic plan – overall objectives incorporating your vision </li></ul></ul><ul><ul><li>Business plan – measurable tasks and objectives </li></ul></ul><ul><ul><li>Budget (a financial plan which supports the business plan) </li></ul></ul><ul><ul><li>Operational manuals (systems) </li></ul></ul><ul><ul><li>Policies and procedures </li></ul></ul>

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Transforming our business model <ul><li>What drives sales and revenue? </li></ul><ul><li>How can we capitalise on sales opportunities, upsell? </li></ul><ul><li>What drives costs and what variable costs can you control? (raw materials, portion control, labour) </li></ul><ul><li>Great service and sales techniques result in good profitability </li></ul><ul><li>We should not excuse the fact that we focus on making money </li></ul><ul><li>Take control of how we want our business to function </li></ul><ul><li>“ Hope is not a strategy” </li></ul>

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What is a system? <ul><li>A blueprint for success </li></ul><ul><ul><li>A plan to grow, develop and maintain the way YOU want your business to operate in accordance with your business plan </li></ul></ul><ul><ul><li>Precise clarity through various means of communication (such as verbal and written) </li></ul></ul><ul><ul><li>Owners Manual (non-negotiable / warrant of fitness) </li></ul></ul><ul><ul><ul><li>Managers reports </li></ul></ul></ul><ul><ul><ul><li>Operational site checks </li></ul></ul></ul><ul><ul><ul><li>Mystery shopper </li></ul></ul></ul><ul><ul><ul><li>Complaint handling </li></ul></ul></ul><ul><ul><ul><li>Staff Meeting agendas </li></ul></ul></ul><ul><ul><ul><li>Weekly communication sessions with senior staff </li></ul></ul></ul><ul><ul><ul><li>Weekly sales specials and incentives </li></ul></ul></ul>

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What makes a good system? <ul><li>Employee Handbook </li></ul><ul><ul><li>Internal policies and procedures </li></ul></ul><ul><li>Human Resource Policies </li></ul><ul><ul><li>Position descriptions </li></ul></ul><ul><ul><li>Employment agreements </li></ul></ul><ul><ul><li>Induction process </li></ul></ul><ul><ul><li>Probationary process </li></ul></ul><ul><ul><li>Performance reviews </li></ul></ul><ul><ul><li>Exit interviews </li></ul></ul><ul><ul><li>Employee birthdays </li></ul></ul><ul><ul><li>Tipping </li></ul></ul><ul><ul><li>Annual leave </li></ul></ul>

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Who implements a system? <ul><li>Anyone who is an owner, manager or leader of people in your team </li></ul><ul><ul><li>Encourage your team to develop and communicate systems within your business that will benefit the customer experience </li></ul></ul><ul><ul><li>Once a system is implemented, it is crucial that there is no deviation from the system unless it is adjusted and communicated </li></ul></ul><ul><ul><li>Plan so you don’t have to fix a problem again, i.e. putting out fires. Create a system with the intention of permanently solving the problem </li></ul></ul><ul><ul><li>Focus on your vision, develop in your planning, implement in the detail through a policy and system </li></ul></ul>

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Planning systems implementation <ul><li>Focus on making the necessary changes to costs and further develop customer relationships </li></ul><ul><li>Assess current strategy; questioning business model, reassessing supplier chains and customer base </li></ul><ul><li>As business owners, allow yourself to stand back from the day-to-day and assess medium to long term growth possibilities for your businesses </li></ul><ul><li>Assess long term objectives so it does not make today’s important decisions difficult or not in the appropriate context (i.e. with your Vision, Strategic and Business plans) </li></ul><ul><li>“ In the current environment you need to be Excellent to operate a successful business” –isn’t that how it should be? </li></ul><ul><ul><li>Don’t be satisfied with the status quo </li></ul></ul>

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Leading your team <ul><li>Creator and Implementer of a system; a director of people with sound communication skills </li></ul><ul><li>Staff will treat our customers in the same way they are treated – greet your employees enthusiastically each day; be polite and respectful; try to accommodate their requests </li></ul><ul><li>The more emphasis put on the sales at recruitment and induction to the business, the more your team will focus on sales strategy </li></ul><ul><li>For existing team members, you need to talk, ask and focus on how sales affect the business </li></ul><ul><li>Service is great for customers; sales is great for customers, staff and owners </li></ul><ul><li>It must be our philosophy to create an “Experience” that entices our customers to return again and again because of the value and consistency (systems driven / order of service) we deliver </li></ul><ul><li>Ensure your staff have a good knowledge of the menu, services, and how things work within the workplace (induction and ongoing training) </li></ul>

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Leading your team <ul><li>Elevating your business above your competition and creating unique PODs – something they may not experience elsewhere </li></ul><ul><li>When teaching staff and managers about suggestive selling / upselling, I’m often asked “how much of a difference does it really make?” </li></ul><ul><li>Training builds confidence – confidence builds sales; teach staff product knowledge daily via toolbox / pre-shift meetings to help them feel comfortable and natural at suggesting items </li></ul><ul><li>Institute fun and fair shift sales contests for all staff, and don’t forget to include the kitchen team too! </li></ul><ul><li>“ The investment”: development for everyone through regular staff meetings, establishing KPI’s, performance reviews, career opportunities, measurable goals, opportunity through variety </li></ul><ul><li>Allow Managers to manage: setting clear budget goals, assisting in making change, daily and monthly reviews, appreciation and reward </li></ul>

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Accountability and measurability <ul><li>Create a culture of accountability and measurability within the workplace </li></ul><ul><li>This old story demonstrates how the simple things can go wrong: </li></ul><ul><li>“ This is a little story about four people named Everybody, Somebody, Anybody and Nobody. </li></ul><ul><li>There was an important job to be done and Everybody was sure that Somebody would do it. </li></ul><ul><li>Anybody could have done it, but Nobody did it. </li></ul><ul><li>Somebody got angry about that because it was Everybody’s job. </li></ul><ul><li>Everybody thought that Anybody could do it, but Nobody realised that Everybody wouldn’t do it. </li></ul><ul><li>It ended up that Everybody blamed Somebody when Nobody did what Anybody could have done.” </li></ul>

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Individual accountability <ul><li>Be proactive and identify deviations at the earliest point – if you “leave something until next week” costs can mount very quickly. </li></ul><ul><li>Don’t be afraid of the tough decisions </li></ul><ul><li>Unpalatable, uncomfortable and unpleasant decisions are often the difference between survival and failure, mediocre and exceptional </li></ul><ul><li>Strive to be exceptional. </li></ul><ul><li>As individuals you must monitor the KPI’s of your business, your department or your area of responsibility. To do so you need the necessary information and reporting to ensure this is available. </li></ul>

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WEEKLY F&B INCOME & EXPENSES (G.S.T. Inclusive) Meet Budget Food Sales $15,317 Beverage Sales $10,338 Plus Free Coffees $416 Retail Sales $530 TOTAL SALES $26,602 Less Deductions $2,340 Less Wastage $27 Less Ups & Downs $2 Café Sales $ 24,232 Difference $ - Actual Banked $24,232 Add back Accounts to be Charged $542 INCOME (inc gst) RELATED TO COGS $24,770 INCOME (excl gst) RELATED TO WAGES $22,021 Food Purchases $4,855 Beverage Purchases $2,866 TOTAL COGS $7,721 Wages FOH $3,800 Wages BOH $4,000 OPERATIONAL WAGES $7,800 35%

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BUDGET SALES $24,000 BUDGET COGS % 30.0% BUDGET OPERATIONAL WAGES % 32.0% BUDGET TOTAL WAGES % 36.0% Summary Week Annual COGS at 32% $482.13 $25,071 Wages at 35% $439.59 $22,859 Potential lost income p/a $47,929

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Finance and budgets <ul><li>What is a budget? Defines your income objectives and shareholder approved expenditure. </li></ul><ul><li>The key to any form of management is measurement and effective communication. If you do not measure something, management becomes almost impossible. </li></ul><ul><li>We attempt to measure the effectiveness of our systems by referring to our daily and weekly income aspirations via our Food and Beverage reports. </li></ul><ul><li>It’s crucial that you know and understand the income and budget expectations of your business; turnover and cost percentages that relate to this. </li></ul><ul><li>What are the impacts on your businesses not meeting your sales / turnover budgets? </li></ul>

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Summary <ul><li>Service professionals are at the “articulating point of management values, beliefs, and systems where the whole business strategy is translated and potentially transformed into day-to-day practice” </li></ul><ul><li>What costs within the business are you responsible for? How can we better control costs? </li></ul><ul><li>Are your team aware that you have certain non negotiable responsibilities? </li></ul><ul><li>Each and every member of your team must take responsibility for meeting the financial expectations of your business; sales and maintaining costs in accordance with your budgets </li></ul><ul><li>Training builds confidence, confidence builds sales, teach staff product knowledge, have pre shift meetings (toolbox meetings), weekly and monthly meetings; help your team feel comfortable and natural at selling! </li></ul>

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<ul><li>“ The investment”, train, train, train….retention through staff development, create a career pathway for your stars, nurture, support and most of all be genuine, show appreciation for a job well done </li></ul><ul><li>Each member of your team represents you and your business, remunerate according to the value they add to your business, recognise qualifications and reward! </li></ul><ul><li>Develop intangible value and equity in your business through sound system implementation; build a brand and business around workplace processes </li></ul><ul><li>Aim for success not perfection </li></ul><ul><li>Management – delegation – accountability. </li></ul>Summary