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Restaurant No Shows - What to do about it

28/4/2015

 
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The restaurant no show problem

Restaurant no shows have reached 4% in Australia according to a recent article that appeared in Hospitality Magazine. With restaurant profit margins sitting at between 3-5% it pays to have a plan in place to reduce this figure.

Here are some way your restaurant can reduce the amount no shows.

1. Forgo reservations 

Clearly the best way to avoid restaurant no shows is to do away with reservations all together. Generally it is more popular restaurants with a number of sittings per evening that can do away reservations all together, it doesn't work for all restaurants. If your establishment doesn't have a high table turnover then you could consider a partial reservation system whereby you allow bookings at certain times of the day.

2. Implement a ticketing system

Offering tickets to a restaurant is one method that almost entirely eliminates restaurant no shows. Even if a party fails to show up, the restaurant has their money in advance. 

When Dimmi spoke to Hospitality Magazine they pointed out that in most other service industries payment is required in advance. Why shouldn't restaurants be the same? 

The system works similar to a cinema. You pay upfront for a set menu and then drinks are paid for on the night. 

Some restaurants have even began to experiment with time-of-day pricing. Customers willing to eat earlier or later in the evening pay less than those wanting a table during the restaurants busy period. The advantage of this is that you even out demand across the day and during the week. You also know ahead of time how many diners you are expecting and can organise staffing arrangements accordingly. 

The disadvantage though is that very few restaurants currently use this system and diners could baulk at having to pay for their meal upfront and decide on a competitor who doesn't require this.

3. Ask for a deposit

A method similar to the ticketing system is requiring commitment to a reservation upfront. This is done by holding a diner's credit card details on file. This system is what is already in place in the hotel industry. If the diner fails to turn up or cancels at the last minute then the restaurant has the right to charge a fee.

This method doesn't need to apply to all diners. Some restaurants only require commitment from large parties of say 6 or more. Others will decide not to charge a fee when the cancelled reservation can be filled by another party. 

The advantage of the deposit system is that as well as reducing no shows it can improve profit margins, especially if the cancelled booking can be replaced by another diner. 

The disadvantage though is that charging the fee is often easier said than done. If the fee is particular high, as it is with some fine-dining establishments, then diners can cancel their credit cards, block the restaurant from taking a fee or have insufficient funds for the payment to be processed.

It appears though that the threat of charging a fee is enough to discourage diners and reduce the number of no shows.

4. Confirm Bookings

Confirming bookings is a proven method to reduce restaurant no shows. Restaurant & Catering Magazine cites the example of the Heritage in Perth that was able to reduce its no shows by 80% by using technology to confirm bookings with diners. The establishment used SMS technology linked to their POS system to prompt diners to reconfirm their booking.

SMS technology linked to a POS system is not the only option. Using email and the phone can be just as effective.


One of the keys is to make it easy for diners to cancel their booking. If you implement a technology friendly solution then reservations can be cancelled when it's most convenient for the diner. It makes it easier for diners to do the right thing and can give you the chance to replace the booking. 

5. Have a policy

The National Restaurant Association recommends having a policy in place in the instant of a no show. 

For example what is your reservation policy, do you charge a no show fee? What criteria must be met for this fee to be charged?

How long will you hold a table before it's given away? Most restaurants will hold a table for 15 minutes before seating another diner. If the guests calls to notify they will be late then some restaurants will hold the table longer.

How will you keep tack of diners that are no-shows? Often your online dining application or POS system will be able to record this data. Will you decide to ban diners who are consistent no-shows?

If you're going to have a no show policy then be sure to fulfil your end of the bargain. Most guests do turn up and they expect to be seated promptly. 

Insurance Options For Hospitality Businesses

22/4/2015

 
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There are a range of different insurance options that particularly apply to hospitality businesses. This post will give you a run down of the different types available and what they cover.

Firstly though, you might be wondering why take out insurance for your hospitality business? Here are 5 good reasons why:

  • Increase credibility with customers
  • Protect your clients
  • Protect your employees
  • Protect against the unknown
  • Avoid financial ruin
The bottom line is that hospitality businesses can't take the risk of forgoing insurance. Let's explore the insurance options that could be applicable to your cafe or restaurant.

1. Public Liability Insurance

Public liability insurance covers you when a customer or member of the public suffers a loss or injury because of your business operation. For example someone slips on your floor.

2. Product Liability Insurance

Product liability insurance covers your business when customers are affected by one of your products. In the case of a hospitality business this is most likely to occur when a customer gets ill because of something they ate or drunk on your premises. 

3. Workers Compensation

Workers compensation covers the cost of benefits paid to an employee if they suffer an injury at work. Workers compensation is compulsory in Australia if you employ staff and pay wages (over $7,5000 in the case of NSW & VIC). It is levied by individual state governments so different rules, regulations and costs apply according to the location of your hospitality venue.

4. Theft 

Theft insurance covers you in the event that your premises is burgled. It covers the theft of your contents and your stock. It can also cover your contents and stock from attempted theft, an armed hold up or an assault. For example if your POS system was damaged but not stolen during an attempted robbery then theft insurance will cover this.

5. Money

Money insurance covers your hospitality business for the loss of money, cheques, credit cards, vouchers and cab charges that are held on your premises or while they are in transit. This type of insurance is a good option if your regularly carry money to the bank.

6. Fraud and Dishonesty

An insurance option that hopefully you won't ever have to call upon. It covers your hospitality business against the theft of businesses property or money by any of your employees. It also applies if an employee is colluding with others outside the business.

7. Property Contents

Property contents is insurance that covers you in the case of a major disaster. For example a fire, storm, lightning, explosion or earthquake. Flood insurance is normally not covered under this type of policy and should be looked at separately. Property contents will cover the cost of replacing items like refrigerators, ovens, tables and chairs and usually includes the removal of debris from your premises.

8. Equipment

What would you do if your freezer suddenly stopped working or your air conditioner broke down on a 40 degree day? It is most likely that your business would be unable or limited in its ability to trade. Equipment insurance covers you in the event of equipment breakdown like this.

9. Stock

You've protect the freezer with your equipment insurance but what about the stock in it? Deterioration of stock works side-by-side with equipment insurance. It will cover you against food spoilage when equipment fails.

10. Glass

For a hospitality business a shattered shop front is not a good look. It's also dangerous and leaves your premises exposed. Glass insurance will come in handy if there is an accidental breakage. It covers replacement of the glass, temporary security to protect your premises, any glass sign writing and the value of damaged stock as a result of the accident.

11. Business Interruption

Business interruption insurance covers you when circumstances out of your control force you to cease trading. A good way to think of business interruption insurance is that it picks up when your other insurance stops. So for example your premises might be insured in the event of a fire. Your policy may limit payment to the replacement of damaged contents but what about the loss of revenue resulting from the interruption? This is when business interruption insurance kicks in. 
Additional Sources: AAMI, Alianz, GIO, Connect Insurance.

Why offering free WiFi to customers makes business sense.

14/4/2015

 
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Offering free WiFi to customers makes business sense. In this post we will outline the tangible benefits for those hospitality business prepared to offer free WiFi, the statistics to back it up and tips on how to make free wifi pay for itself.

The benefits of offering free wifi to customers

Here are the tangible benefits to hospitality businesses offering free WiFi:

Attract new customers

Offering free WiFi can attract solo dinners by removing the discomfort some people feel when they eat alone. myplaceconnect.com reports on a survey that found 53% of customers would be happy to sit by themselves in a restaurant or cafe if there was free WiFi. The survey also highlighted that tourists were another customer segment attracted to a hospitality venue offering free WiFi.

Attract more customers 

cio.com reports on a study that found offering free WiFi would attract more customers at times when hospitality business have fewer customers. Busting the myth that offering free WiFi would lead to customers hogging tables during busy breakfast or lunch periods, the study found that hospitality venues experienced a spike in free internet usage during the afternoon when they were least busy.

Increase average customer spend

smallbiztrends.com reports that over half of those hospitality businesses that installed free WiFi experience an increase in the average amount spent per patron, only a very small amount said customers spent less.


Helps differentiate your business

Offering free WiFi can be a point of difference if your competitors aren't offering the same service.

Meet customers expectations

With the availability of free WiFi rapidly increasing, customers are starting to expect it as the norm. myplaceconnect.com reports that one in every ten patrons left a venue because it didn't offer free WiFi. 
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Tips on offering free wifi to customers cost effective

Offering free WiFi to customers doesn't have to be a cost to your business. Here are a number of ideas that will mean offering free WiFi can pay for itself:

Offer a free service and a premium service

You could offer customers a free service that is capped at a certain length of time and speed and then offer a premium service for those willing to pay for faster speeds and bigger downloads.

Tie WiFi access to purchases

The system could work along these lines: offer free WiFi capped at fifteen minutes. You could then offer thirty minutes for those who bought a coffee and an hour for those who bought a meal.

Use free WiFi as a marketing tool

We came across an example of a dutch cafe that offered free WiFi but regularly changed their network password to things like:


BuyALargeCoffeeGetAFreeBrownie

Another option is to ties access to your WiFi to social media. Make a "like," "share," or "follow" a condition of accessing your network. This ensures you can remain connected to the customer after they have left and encourage them to return through your social media profiles.

One of the best ways to get value out of offering free WiFi is to collect customer demographic data when they access your network and then use this to send targeted marketing communication messages via email.
We'd love to hear your thoughts on offering free WiFi. Do you offer it? Would you consider it? What's been your experience with free WiFi in hospitality venues?
Via: cafeculture.com; myplaceconnect.com; smallbiztrends.com; wireless-social.com; freakonomics.com; cio.com.

10 Ideas To Motivate Employees in Hospitality

7/4/2015

 
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In an industry that often has high-turnover and low levels of staff pay it is critical that hospitality owners and managers have a plan in place to motivate employees.

Evidence suggests that great teams are built and don't happen by chance. Here are 10 ideas to motivate and build a great team!

1. Communicate A Vision

Motivating employees starts by communicating a vision for your business. A vision is a roadmap of what your setting out to achieve. If employees feel they are part of something bigger than just themselves it will give them a greater incentive to come to work each day. Tell your staff how they fit into the vision for the company and the rewards that will come from their input.

2. Communicate

Communication doesn't stop once you have sold a vision, it is an ongoing process. One way to motivate staff is to ensure that news, expectations and responsibilities are clearly communicated. Follow up communication is also important to make sure that information is being received, understood and delivered appropriately. Regular meetings, newsletters and memos are all tools available to communicate to staff. It is important that communication is a two-way street!

3. Interesting Work

Providing interesting jobs is one way to motivate employees in the hospitality industry and provide confirmation an employees job is valued. Employees want variety in their job and learning opportunities. Can your business do more in this area? Job enlargement, job enrichment and job rotations are all areas to consider to provide interesting jobs that motivate!

4. Educate

Education is also a win-win incentive to motivate employees in the hospitality industry. Staff learn new skills which help your business while they feel more confident in the workplace and become more loyal.

5. Tools 

Staff can quickly become unmotivated if they don't have the tools of the trade required to do their job properly. This includes physical tools but also the know-how to get the job done. Ensure that managers are regularly checking and employees feel empowered to communicate anything that falls short in this area.

6. Provide Feedback

Providing feedback is a great way to motivate employees and serves to strengthen relationships. Feedback should be given as often as possible. Rather than waiting for formal reviews give feedback straight away. This goes for either positive or negative feedback. Providing feedback right away encourages repeat performance in the case of positive feedback or corrective action in the case of negative feedback. 

7. Trust

Creating a culture of trust fosters loyalty and motivates employees to work harder. Trust is not something created overnight but built upon and maintained through a serious of many small actions over time. By displaying honesty, being upfront and authentic in dealings with all your business stakeholders is the way to demonstrate and build trust. This should be done on all occasions, even when it is difficult to do so.

8. Act Fairly 

Treating all employees fairly, regardless of their seniority or background is one way to attract respect and motivate employees. When issues arise, examine the circumstances of the situation, be open and consistent in your decision making. If you get it wrong, apologise. You will earn more respect this way.

9. Offer Recognition

Recognition for a job well done is a powerful way to motivate hospitality employees. Recognition should be done often, in-person, and publicly if possible. Restaurant & Catering Magazine reports on a study that found praise from supervisors and company leaders was as important and in some instances more important than financial rewards.

10. Provide Incentives

A particularly powerful tool to motivate employees the hospitality industry is to implement a staff incentive scheme. Restaurant & Catering Magazine reported on a study that found this tool could boost the quality and quantity of an employees work by up to 40%. These incentives needn't be costly either. In fact it was found that some non-financial schemes were more effective than those offering purely financial rewards. The recommendation was to opt for a number of short-term incentives, with varying goals and a level playing field to ensure everyone had  fun and a shot at winning. 
Via: AboutMoney.com; Academia.edu; eskill; Hospitality Guild; Restaurant & Catering Magazine.Incentives for Rewarding Good Performance: Employees’Perception in Luxury Hotel Industry
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