Hey Hot Potatoes,

Welcome to the latest edition of the Hot Potato Newsletter! What a whirlwind it's been lately, anyone else feeling like they're juggling hot potatoes just to keep up?

April has certainly delivered some economic plot twists, we've seen those national minimum wage and NI contribution hikes for employers that have the hospitality sector collectively clutching their pearls. The result? More cost increases landing on your plate... it's fair to say Rachel Reeves won't be on many people's Christmas card list this year!

With all that being said, I thought this week would be the perfect opportunity to explore how we can tackle these challenges head-on and position yourself to come out of this economic rollercoaster even stronger than before. In today's newsletter we're diving into clever ways to offset those increased costs – from revenue-boosting strategies and operational efficiency hacks to some seriously smart (and perhaps unexpected!) cost-cutting tricks that won't compromise your quality. As always, let's dive in!

In today’s email: Profit Under Pressure: Smart Strategies When Costs Rise

Read Time: Approx 4-5 mins

Focus on increasing your revenue

Source: Dan Aldridge - Founder Eat the bird

Before you even think about cutting costs as a response to these price hikes, let's talk about where your focus should start, boosting your revenue! Here's how to squeeze more juice out of your existing operation:

• Table Turnaround Times: It's a very simple equation, the more customers you serve, the more revenue comes in! Think about it: small tweaks to your menu layout, restaurant flow, staff efficiency, and making the bill-paying moment absolutely painless can have a big upside. Those extra 10 minutes saved per table? That's another round of paying customers through your doors.

• Missed Upselling Ops: The question you should be asking yourself is: are you leaving money on the table? Those starters, desserts, sides, drinks... have they all been offered during the meal? If you don't, there is potential revenue walking right out the door.

• Bookings and Digital Channels: Make sure the process of booking is as effortless as possible and that your maximising all digital channels from click and collect and delivery to catering. The name of the game is making it ridiculously simple for customers to throw their money at you, wherever they are!

• Elevated Guest Experiences: Now's the time to treat your guests like absolute royalty. The benefits? They're two-fold and absolutely massive - you'll not only have them coming back for more, but they'll bring their friends, family, and possibly their entire social network along next time!

• The Basics: Let's not beat around the bush, you need to make sure no stone is left unturned when it comes to the fundamentals. Are you showing "fully booked" when you've got tables free? Are your tablets all online? Can you squeeze in a couple extra walk-ins? Don't miss out on sales due to these obvious blunders.

According to Dan Aldridge, founder of eat the bird, if your turnover is circa £1m with a 30% wage cost (assuming 30% of workforce are under 21 or part time) you’d need to only increase sales by around £47 a day to offset the new cost increases. Remember, small wins on a daily basis can equate to big wins in the longer term!

Business review 101

Cost increases give you the opportunity to comprehensively review all aspects of your business and their workings from operations to finances and suppliers. It's like spring cleaning for your business but instead of finding lost socks, you're finding lost pounds! Here's what to consider:

• Leverage Tech: There’s a whole plethora of tech out there but its worth investing in a few key areas to improve operational and business efficiency, making better quality decisions based on data. Platforms like Nory, Tenzo and ClearCOGS can help improve all aspects of operation, business performance, forecasting and much more.

• Smarter Energy Policies: One overlooked lever to save costs is energy. Its 100% worth using a broker like Fidelity Energy (not an ad) who work with a host of suppliers to find you the best deal on the market. They can also provide consultancy and highlight how you can be more efficient with your energy use.

• Supplier Review: It's always worth checking your contracts with your suppliers to see if you are getting the best deals as well as seeing if you can lock into longer term contracts if they can end up reducing costs. Remember, if you don't ask, you don't get!

• Financial Management: Understanding your business’s finances and cash flow is absolutely essential. Use tools to help organise your finances so you know the ins and outs of all the different costs in your business.

It goes to show that there are ways of being clever and becoming more efficient as a business without any need to reduce things like the quality of your offering or the level of services you provide. It's not about cutting corners, it's about finding smarter routes to the same destination!

Other savings to be aware of!

Source: TaxExpert / Sage

There are some other savings to be had and things to be aware of, including government schemes, check them out below.

• NIC Thresholds: The threshold for not having to pay NIC for an employee is £416 per month. If you are able to structure hours around this you could look minimise NIC. It’s also worth noting the employees under 21 are exempt from NIC too.

• Salary Sacrifice Schemes: These schemes allow you to exchange a portion of your salary into things like pension contributions or cycle to work scheme, which in turn means you pay less NI and tax, offsetting the increases we’ve just had.

• Outsourcing Business Functions: Depending on how big your business is, you could look to outsource certain business functions like HR, marketing or finance to pay a smaller monthly fee than hiring full time. Sometimes the smart money is on pay-as-you-go expertise rather than a full-timer sitting around!

• Maximise Employment Allowance: Despite the increase in NIC, the employment allowance has increased to £10,500 from £5,000. For employers this means that you are now exempt from paying the first £10,500 of NIC payments. Make sure you claim this!

It’s essential to be aware of the benefits you can claim as there are serious cost savings to be had! Sometimes the most powerful savings aren't about cutting back, they're about being savvy enough to know what you're entitled to.

Today we've had a quick run through on how you can adapt to the recent increase in costs, by focusing on increasing your revenue, enhancing efficiencies in the business and being in the know about other loopholes and schemes. What’s one change you’re going to make in response to increased costs?

Now, in the next edition of Hot Potato, we'll explore one of hospitality's greatest success stories: Nobu. I absolutely love the brand and what they've built as a business… the black cod with miso, just epic. We're going to explore their remarkable journey, from Chef Nobu Matsuhisa's partnership with Robert De Niro to their evolution from a single NYC restaurant into a global empire of restaurants and luxury hotels.

Ready to dive deeper into and learn more about how Nobu scaled into a global brand? Subscribe now to have the newsletter delivered straight to your inbox in our next edition!

Bon appétit,

Max Shipman, Founder, Hot Potato

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