Why don’t you always get the right story?
The Landlord or Brewery will often say that the expected margin on their tied liquor product is say 55-57%. But in reality this depends upon pricing, local competition, the location of the cellar in relation to the bar, the cellar gas system and other wastage factors. So the real margin you can ultimately achieve may well be only 50%. On a high turnover this can amount to a lot of money – and a big difference to your financial estimates.
You might have been told that the room occupancy is 65% at an average rate of £55. But how easy is it to get 65% all year based on trading 365 days of the year? Is it even the real figure? Is the quality of the rooms and furnishings up to scratch? And maybe they are planning to build a 60-bedroomTravelodge near to you with rates of £45. It all makes a big difference.
You may well have been told that the wages are at a certain level, but this may have been for a working couple, where one person has been the Chef, and the other has run the front-of-house. Your own situation may be very different – you may have to employ a Chef, or a Manager, and that will not be cheap. The figures will look VERY different. And if you’re the Chef yourself – who are you relying onto be the public face of the business? Having the wrong person can completely ruin your prospects.
What the sales particulars don’t tell you?
Have you seen that on many sales particulars it often says something like “Great upside potential for experienced operators”? Usually this is put there to protect the agent because they have put a wildly optimistic valuation on the business or the figures have been exaggerated. It is not always easy to do better straight away.
On these same sales particulars there could be a phrase like ‘Easy operation for proprietor couple’. Unfortunately there is nothing easy in the hospitality business and sooner or later you will need to develop a good team. So it is vital to be realistic at the outset and cost your plans with the optimum level of labour scheduled at the right time.
Find out how we can help
For a no-obligation initial discussion phone Julie Godsoe on 01628 487613
or send an email.
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