Staying afloat

From keeping your care home’s food waste minimal to helping with budgeting and planning, we hear from some of the industry’s experts to find out how to best manage expenses.

What does the cost of living crisis mean for your care home? After a turbulent few years and the pandemic bringing with it an array of unwelcomed challenges, the soaring energy costs and rising inflation is undoubtedly difficult to navigate through.

With Greetwell Purchasing Solutions’ Care Home Buyers Guide highlighting how there were financial pressures within the care sector before the pandemic arose, they detailed that in 2018 alone, more than 100 care homes in the UK were made insolvent. This shows that the sometimes wafer-thin margins on which some operate can mean trouble if you don’t pay attention to every aspect of your business.

The eBook which Greetwell put together on ‘How to Reduce and Manage Food Costs’ explained that when it comes to purchasing consumables - including food, cleaning materials, uniforms and stationery - the process can unfortunately be fraught with long, time-sapping administration. Thankfully, there are several ways in which you can look to mitigate this within your organisation, which are highlighted throughout the eBook.

One of these methods included reducing your costs per resident, per day. Greetwell explained: “Looking at operations from a top-down viewpoint is often useful, but understanding the needs of your catering team, residents and the expectations of families is also needed.”

Saving costs is a benefit in itself, but it comes with further advantages when you are able to take the money that has been saved and apply it to a different area of the business in order to generate either greater profits or boosted footfall.

As catering operations continue to face rising food prices, Hayden Hibbert, Client Relationship Director at Food Procurement Experts, allmanhall, looks at key areas where caterers could become more efficient and thereby make significant cost savings.

According to Hayden, “Reworking the menu offering, reassessing how the supply chain is managed and revisiting operational practices could all have a positive financial outcome for catering operations.”

Using smart and effective recipe and menu engineering can make a big difference when it comes to food costs. Without changing the offering, costs can be reduced by looking at your cost-to-serve. This is the cost for a supplier to make a delivery. It can be brought down by limiting the number of deliveries you have each week or by increasing the value of each delivery: “The other thing you can look at doing is reducing the need for your supplier to split cases, which again brings down your costto-serve.” Hayden added.

Another way of driving cost efficiency is by using modern equipment. When did you last consider your capital investment strategy in regards to equipment? Like spending on training, the benefits could quickly outweigh the outlay.

Food inflation is a reality. Hayden commented, “allmanhall aims to help its clients in theses testing times, be it by negotiating down proposed price increases, advising on product alternatives and range management, or mitigating risks.”

With the food inflation crisis continuing and the need to maximise budgets even more crucial, Katrina Lane, Senior Relationship Manager at allmanhall offered advice to catering teams on ways to provide healthy nutritious meals within budget.

“A starting point is an accurate costing model that provides a comprehensive understanding of all the contributing costs across the catering operation. Full visibility of the fixed, and especially variable (controllable), costs is essential. Keeping track of this data, and nimbly controlling variable costs whilst also battling increasing food prices, can protect the foodservice operation from excessive spending on ingredients, labour, and energy costs.” Added Katrina.

Katrina revealed how savings will also be made by increasing the level of in-house preparation: “However, a cost benefit analysis is still recommended, as it is important to factor in additional costs of doing this, such as energy, labour, and equipment depreciation.” Batch cooking is a good way of saving time and increasing production output for the same labour input.

At the back end of last year, Care England revealed their concerns about energy renewal costs faced by care providers since the War in Ukraine. Following feedback from their hugely successful energy webinars and their subsequent formal challenge into OFGEM around unduly onerous energy supplier practises, Care England aims to support care providers to secure the best value for money possible for gas and electricity.

Care England shared that as of mid-January, The Treasury has published a factsheet that outline the next steps of government energy support. The new business energy scheme will run from 1 April 2023 to 31 March 2024. The current £18 billion scheme (Energy Bill Relief Scheme) announced in September comes to an end in March 2023. It supports businesses and public sector organisations such as schools and hospitals by providing a discount on wholesale gas and electricity prices.

The Treasury has also published a letter sent from the Chancellor to Ofgem, which outlined the latter’s initiative to launch a deeper review of the energy market, to provide further support for customers (this can be viewed on the Care England website).

Budgeting is important to every care home, small or large, and setting this out clearly from the offset will only benefit you in the long run. Budgeting allows you to plan expenditure based on expected revenue and allows you to set financial targets for the home whilst having set allocations. Having a clear indication of your financial goals at the beginning of your financial year will give you greater control over your money and spending, which is why it’s advised you work with an accountant to help implement your budget and track actual figures.

With gas and electric being one of the main areas of expenditure, it’s important these are prioritised when assessing yearly and monthly outgoings. Whilst we appreciate that it’s simpler to keep working wiht the same provider to ‘stick to what you know’, you could find that by shopping around you could save hundreds.

Navigating through these tricky times can be difficult when you have a business and reputation to uphold, but leaning on industry giants and experts is the way forward. Always ensure your source is reputable and if you need any further details on the information we have shared, please feel free to get in touch – we would love to hear from you!