News Analysis Recession tips
Recession proof your business As the Canadian economy flirts with a recession, consumers will likely cut leisure spending. Liquor Canada found out what licensees can do to cut costs and keep revenue up Times are getting tough. Take the U.S. restaurant industry – it’s enduring its toughest time in 17 years as tight credit and falling home prices compel consumers to spend less when they eat out, a National Restaurant Association economist told Reuters. Recent reports have shown restaurant closings in London, a crisis in Paris and concern across Canada that consumers will tighten up on leisure spending and enjoying an evening eating out will be up on the chopping block. In Ontario, sales seem to be holding up for now. The Liquor Control Board of Ontario says it hasn’t seen a drop in sales to licensees. Compared to last year, wine sales to bars and restaurants have actually increased by 4.5 per cent from April to October 2008.
Quick tips 1. Promote low cost items to increase profitable cash flow 2. Be careful of overbuying. Use par stock levels, don’t keep them too high 3. Keep storage areas well organized and locked 4. Check your menu portion sizes, are customers getting the correct size portions? 5. Ensure all outgoing items from the bar and kitchen appear on a guest cheque – even complimentary Source: Cobalt Hospitality Consulting
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In Alberta, total alcohol sales are up six per cent in 2007/2008 over the previous fiscal year, according to the Alberta Gaming and Liquor Commission’s annual report. However, the vast majority of alcohol ($1.6 billion) was purchased at retail outlets for consumption at home or private gatherings with friends. Of the nearly $900 million spent on beer, roughly three-quarters was doled out at retail outlets, followed by $210 million at hotels, bars and lounges. “People can’t afford to drink in public anymore,” Dawn Johnston, professor in food culture at the University of Calgary told the Calgary Herald. Johnston noted in Alberta, pints of beer run about $7 and inexpensive wine costs $8 a glass. The West Coast tells a different story. Restaurants have been hit especially hard given the number of large restaurants opening up in anticipation of the 2010 Olympics in Vancouver. Reports show the average cheque is shrinking substantially, while wine sales to licensed establishments are down. Suppliers, it seems, are calling on their customers, inquiring about their reduced orders, while chefs are looking for a cheaper cut of meat. Jay Mangan, general manager of Doolin’s Irish Pub in Vancouver says his average cheque remains the same, for now. “The major market crisis hasn’t fully hit us yet but it’s coming,” says Mangan. “I’m forecasting for a drop in sales.”