Supply Chain Support – Restaurant, Bar & Hotel sector

November 25, 2022
|In Cost Management
|By Emma Vinters

Amongst the hardest hit during the pandemic were the hospitality sector and its supply chain. Central support and positive recovery to trading in 2022 has consequently meant many businesses have survived intact, some even flourished.

Difficult winter ahead, economic challenges exposing legacy issues

However, many of the risks that existed before March 2020 have been artificially overcome during the pandemic so the outlook will be bleak for some. Difficult decisions will have to be made without central support making the period ahead more challenging than the past 3 years. The certain reality in a retracting economy is rising costs across the supply chain also against falling incomes.

Energy and utility costs are grabbing most of the headlines as we have discussed in recent blogs, and as a direct result many other parts of the supply chain are also eroding already tight margins. Basic cost of sales such as food, beverage and other everyday items are in an ever upward cycle, with many essential categories twice the price of 2019.

Supportive solutions available

At Assured Hotels we have long established supply partners who we know we can trust to improve supply chain and additionally commercial benefits.  This experience is tried and tested on our recent case studies, therefore, to highlight solutions and initiatives we focus on food supply with our partner Entegra Europe.

              

Entegra are a savings solutions partner, working across the hospitality sector to improve the profit margins of their clients. Operating with a self-funding, savings-led model, they remove any up-front costs or risk. They specialise in procurement services, delivering operational margin improvement and providing system solutions to enable clients to protect their profit margin and deliver improved operational efficiency.

 

Unlocking supply chain potential

The food “basket” is complex with many categories performing differently with supply sources across the world, so we have shared Entegra’s detailed monthly market report here.  Highlights of this report include:

  • Food categories, how individual food types have fared and insights on what future trends look like.
  • Summary of current challenges and how factors such as energy and exchange rates are impacting food and general supply chain.
  • Seasonal produce for the winter, Christmas and beyond across all categories.
  • Outlook across non-food, inflation, fuel and other contributing trends

Price & availability data – access to allow for better planning to protect margins

This is probably the number one challenge for Chefs and managers with their supply chain, so we conclude with a case study. This analysis shows October price movement into November and more importantly how our support with Entegra’s purchasing power and experience could help against open market supply chain.

Steep year on year rises – the table below shows a £100k unit food spend taken from the management dashboard.  Year on year the same business spent over 8% more for the same basket, to service similar incomes. Increases are much higher in some categories than others.

 

Managed versus unmanaged supply – through a supply partnership the savings on this basket over a 6-month period are almost £62k. The chart below from the dashboard shows managed pricing against open market price data.

Working with a procurement partnership with Assured and Entegra will provide:

Preparation – price “ghosting” analysis, to demonstrate actual savings

Account management – operational & commercial support including:

  • Monthly ops review including price movements, best practice, and lost opportunity recommendations.
  • Live reporting between ops teams and financial controller through cloud-based software.
  • Menu costings, written not only to maximise margins but also payroll cost and team capabilities.

Price files guaranteed for a month, any “big shocks” flagged.

Legal support – changes to regulations and support on operational impact, including allergens, food safety and general kitchen management.

 

We would suggest a review of all supply and operational process is a must. This would be on a no obligation basis, and opportunities in all food and non-food categories identified in a “Ghosting Report”

 

Welcome to Assured Hotels  

Assured Hotels offer specialist support to hotel owners and stakeholders, especially in Hotel Advisory and Asset Management capacities. We have been engaged in turnaround and restructuring projects, trading insolvent businesses and in the acquisition or disposal of hotels on behalf of investors.

We maintain impartiality and independence free of any fixed portfolio, offering support services across all disciplines.  This includes sales and revenue growth, marketing, finance and reporting, procurement, and compliance. Our flexible contracting ensures affordability, with additionally an emphasis on the development of the hotel’s senior management team. We believe this creates better returns for investors and stakeholders.

Please click here to book a meeting, email mgriffin@assuredhotels.co.uk  or call 0203 916 5658.

Or to contact Entegra direct, Iain Shaw email iain.shaw@entegraps.uk or call+44 (0)7774 785 027