What is the hospitality industry really like?

I’m constantly amazed by the perception of outsiders that this industry is easy and that almost anyone can run a restaurant, café or the like. After thirty-five years of working with hospitality and foodservice businesses of all types and all market levels I’ve come to argue the opposite. I have immense respect for the people who do it well, because to run a hospitality business well you have to manage quite a long list of very tricky variables.

Take those rose colored glasses off

Consider what I tell the participants in my management workshops:

“You are in an industry that is subject to the fickle whims of fashion and your customers view what you do in their own irrational, idiosyncratic way. Likewise, new technology and useful services are coming thick and fast and if you don’t take advantage of them, and your competitors do, you’ll fall behind. To prosper, you have to keep a close eye on the world around you and be prepared to react quickly.

You also have to run your business with a volatile mix of permanent and casual staff, all of whom have varying degrees of commitment to what they are doing. Many have no real interest in the industry, and deep down hate being of service and think that selling is a form of prostitution. Some are ‘sensitive artistes’; some are tyrannical megalomaniacs, and most are enthusiastic party animals. You have to lead them to work together towards a common, united goal. It’s like herding cats.

At the same time as managing the human side of your business you have some tricky practical issues to contend with. You have many, many items in stock that are used by and useful to almost all people. You hope to sell these items at a profit before your staff consume them, steal them or give them away, and unlike most other industries, a high percentage of your stock is rapidly decomposing and has to be sold before it ends-up in the bin or kills half the population. To add to your troubles some of your suppliers are trying to rip you off while pretending to do you a favour.

On top of all this your customers’ behaviour is often bizarrely affected by alcohol, and your staff are on drugs and are all sleeping with each other.”

If you think I’m exaggerating, you haven’t seen what I’ve seen. Having been drawn out into many other industries during my career as a consultant, I’ve only seen one other industry that I think is more difficult to manage — that’s high tech manufacturing. The rest are a piece of cake compared to hospitality.

Ego and stupidity is a bad combination

This industry is full of irrational egos

This industry is full of irrational egos

And yet it seems so easy when viewed from the outside. We get a steady procession of people coming to my office who want to buy restaurants and cafes and who seem to think that because they do good dinner parties they are qualified to become the next Heston Blumenthal. It gets really scary when we ask them what they expect to be doing and they tell us that they will employ a manager and just swan around and socialise with their customers.

It gets even worse. When questioned about how much money they expect to make, they often tell me they are going to make 25 or 30% of their turnover. This is based on the fact that they have mentally priced the raw cost of a few meals and concluded that the rest of the selling price is profit. If only.

Unfortunately, it’s not just outsiders who are naïve. I have contact with a lot of overworked hospitality operators who are struggling to make money and who insist on running their businesses by the seat of their pants — vehemently rejecting any systemisation or modern management techniques. It’s frustrating for me because I know with a bit of time and effort in the right places; they could have a good business and a good life, but they are victims of: ‘They don’t know what they don’t know’, just like the new entrant. Day in, day out, they keep repeating the same mistakes without realising they are shooting themselves in the foot.

Being busy does not mean successful

There is no direct relationship between busy and successful

There is no direct relationship between busy and successful

A disturbing number of these people equate a ’good business’ with being busy. While it’s nice to be busy, it’s not the be all and end all. For a business to be successful it should be steadily growing, genuinely profitable and deliver a desirable lifestyle to the owner. If we applied these criteria to your business would it pass?

I get an awful lot of consulting work because of the tendency of hospitality businesses to destroy the lifestyle of the owners.

Invariably these are people who jumped into the industry because they thought it was easy and thought they could make a fortune and then discovered that the only way they could make any money or ensure happy customers was to work horrific hours and not take holidays. They are often trapped in an ugly prison of their own making.

On the other hand I do have some very skilled, very successful clients — and they have my utmost admiration. They seem to have some things in common: First, they are strategic thinkers who look ahead and don’t get bogged down in the day-to-day operations. Second, they are self disciplined people who are organised and can work on long term goals that may take some time to yield a benefit. Finally, they understand that there are so many things to manage that they can’t possibly do it all themselves and readily hand over authority and responsibility.

If you think this industry is easy you’re probably destined to either go broke or always run a small business.