With the receipt of the July 2023 funding payment, we are now receiving clients’ full year financials to 31 March 2023. Reviewing these there are some trends of increasing expenses coming through which warrant mention.
With the rising cost of living front of minds for all of us, there are potential opportunities for all owners to take a closer look at their expenses and see if any of these can be reduced to improve financial performance :
Where a food service is offered. For some this has increased by as much as 25% to 30%. Reviewing your buying practices, supplier arrangements and reducing discretionary purchases will assist in managing these expenses.
For example, negotiating rebates or discounts from suppliers for bulk purchases, ensuring the menus focus on in-season only products, and reviewing food wastage will assist in mitigating increasing costs. Working on this as a project with your team may help identify improvements in the service being offered and cost savings.
These have been slowly increasing year on year. For some owners’ savings have been achieved with a change in service provider which has resulted in savings as high as 35% through using an alternative cleaning option. When was the last time your contract for cleaning services was reviewed?
Some-what linked to rent increases occurring due to the rising CPI levels, is rising insurance costs. A review of your insurance costs may be timely, particularly business cover, contents and business interruption insurance that may be in place.
While electricity costs have inevitably been on the rise, there are options to help manage this cost with the help of your employees. Implement energy-saving initiatives such as using energy-efficient appliances and lighting, turning off unused equipment, and optimizing heating and cooling systems.
For all of the expenses in the business, bringing your team with you on a journey to focus on areas that savings can be made is ideal. While the opportunity may only be small savings in each area they will soon add up to a more profitable and sustainable business.
If you have any questions on benchmark values for operational expenses, contact Linda Harley 022-3549189 for a confidential chat.