By Cory Dellinger, Senior Director of Senior Director of Avendra’s Consulting Services and Vicente Avalos, Director of Discovery at Avendra.
As the industry’s leading hospitality procurement services provider, Avendra works with clients to implement best practices and labor control procedures to increase profitability and streamline processes.
While workers in the United States are enjoying one of the lowest unemployment rates in history – with 157 million people employed since June – hotel operators and restaurateurs continue to struggle with employee turnover and retention. According to the Deloitte 2019 Travel and Hospitality Industry Outlook, the current hospitality workforce gap has reached unprecedented levels, with the U.S. Bureau of Labor Statistics estimating there were more than a million job openings within the leisure and hospitality sector in 2018 versus over 350,000 job openings in 2009.
Food and beverage is a department plagued with high employee turnover. An additional $1 per hour at a hotel or restaurant down the street may be enough of an incentive to lure an employee away from the job. The same can be said for hotels with all-star Chefs. Some veteran cooks may not want to try new culinary techniques, so novice new hires who have fresh culinary skills will go where their talents are appreciated. Then there are those culinarians who are on career paths to become Celebrity Chefs themselves or who strive to work with Celebrity Chefs to improve their resumes so they leave one property to go to the next where they can learn from the best or be associated with the best.
As North America’s leading hospitality procurement services provider, Avendra works with its suppliers to identify solutions for its clients’ labor challenges. Furthermore, Avendra Consulting Services (ACS), offers client’s an analysis of their labor effectiveness to identify opportunities for increased profitability and evaluating and implementing processes versus people dependencies. On average, ACS conducts 40 Profit Improvement Projects each year, and based on increasing demand for this service, the group anticipates doubling that number within the next three years.
Here are 8 ways Avendra – with its deep supply chain reach – works with hoteliers, restaurateurs and hospitality companies to maximize profits while keeping labor costs in line with budget goals:
1. Updating / Implementing Staffing Guidelines
One of the first areas that ACS analyzes when working on a profit improvement project for labor effectiveness is updating or implementing a businesses’ Staffing Guidelines. This is much easier to do when properties use operational software that contains an algorithm to determine the number of employees needed for each defined job function. Based on hotel occupancy or the number of projected restaurant reservations, the formula looks at revenue projections, covers, budget forecasts and other factors to ensure the minimum number of positions are filled by employees with the necessary skill set. Staffing guidelines cover every employee and every department and help operators understand how much food needs to be purchased to serve a specific number of guests. Without staffing guidelines, it’s nearly impossible to forecast labor and manage costs effectively.
2. Leveraging Cross-Cultural Interns
To fill job positions that are lacking in the U.S., ACS works with its hotel and restaurant customers to determine if hiring students from other countries is viable. Not only will this help to fill vacant jobs, but it also helps apprentices learn new skills. Interns on a J-1 Visa (exchange visitors who travel to the United States through a Department of State approved sponsor program to teach, study, receive training or demonstrate special skills) have a defined start and end date and must return to their country. This program is typically a revolving door of in-and-out associates that provides labor resources at lower costs and offers owners significant tax benefits.
3. Negotiating Pricing on Pre-Cut Produce and Pre-Portioned Protein
If a facility is buying whole produce and kitchen staff are cutting it themselves, Avendra will negotiate with its supply chain to get the best pricing for pre-cut product. Buying diced carrots, onion and celery and cubed melons will save considerable time. While Avendra does not recommend buying pre-cut items for every facility, depending on the segment or market, it can be a huge win for labor and cost-savings. The same is true for whole fish or beef tenderloin. Avendra will work with its suppliers to purchase consistently portioned pre-cut proteins to save on labor and maximize yield.
4. Structuring Menus and Staffing
ACS is working with operators to structure a more well-balanced menu, and in doing so creates opportunities to cross-utilize kitchen staff as a great way to save costs and maximize labor skill. Avendra helps operators understand that kitchen multitasking is key to managing labor and costs. Using one line cook to manage two stations is a great way to save money, give an employee more responsibility, and ultimately increase job satisfaction. Avendra also helps operators better understand their sales mix. If a station is expected to do 40 or 50 covers, one person may be enough to execute proper service. Proper staffing and understanding the sales mix is a recipe for success.
5. Shopping the Trends
Operators are finding that replacing traditional sit-down breakfast items with Continental offerings (baked goods, jam, fruit, and coffee) and purchasing pre-made appetizers are great ways to save on labor. Avendra is working with its supply chain to find the best bakery and appetizer options to meet customer demand. They may also work with properties to utilize their recipes so that the products are unique. Rather than employing 20 people to prepare high-quality baked goods in a bake shop or paying for high-priced hourly line cooks to produce 1,000 appetizers for a large banquet event, Avendra is showing significant savings that can be achieved via pre-orders that don’t lack in taste or quality.
6. Performing Due Diligence
Hotels and restaurants cannot spend valuable resources calling suppliers and getting multiple bids on berries or other food items to ensure they are receiving competitive prices in the market. As a property procurement partner, Avendra does the leg work for its clients, including sourcing suppliers, soliciting bids, and writing/reviewing the contracts. It also puts caps on price increases and has access to supply when there is an incident – like the Avian Flu outbreak (N1H1) that caused many operations to do without product. All of these services help to keep overhead lower. Utilizing e-procurement software can also help create more automated processes for reordering that can limit people dependencies.
7. Identifying Alternative Foodservice Delivery
If managing room service is becoming too labor intensive a hotel, ACS suggests implementing an in-house marketplace offering made-to-order foods, including impulse sweets, savory treats and beverages. The retail outlet can be set up in spaces that are near high-traffic areas and that are being underutilized. Roomservice labor can transfer to the hotel’s restaurants as needed or the positions can be eliminated altogether.
8. Cleaning House
In addition to analyzing hotel F&B, Avendra also works with customers to understand the profitability of their in-house operations, such as laundry. Labor sometimes represents 50 percent of a hotel’s laundry operating costs. In cities where the minimum wage is exceeding $15 per hour, it is cost-prohibitive to staff an on-site laundry. Hoteliers are at the mercy of labor resources, electricity, heat, water and a lot of moving parts. If the hotel owns its laundry equipment, then it is a sprint to keep it going. Additionally, with municipalities putting restrictions on water, chemicals and power usage by a property, cleaning linens and terry, in-house laundry may no longer be a smart financial investment. Rather than using water one time and discarding it, Avendra is working with professional laundries that recapture and reuse water and power. Not only is this good for the environment, but there is also a labor savings factor to consider – linen reuse means less labor. While the rooms still need to be cleaned, less time is spent collecting dirty linens, washing them and stocking them for future use. To learn more, read “How outsourcing hotel laundry can improve operations, safety.”
According to the Bureau of National Affairs, $11 billion is lost annually due to employee turnover. If it costs a hotel approximately $4,000 to hire, train and uniform one worker, just think of the money that can be saved if hoteliers had best practices in place to retain their employees and manage that labor more efficiently. Rather than looking solely to the human resources department for help, clients can leverage Avendra’s buying power with its deep supply chain relationships and services to offer relief from the financial impact of hospitality’s continued turnover epidemic and at the same time provide overall cost savings.