“There’s no room for error. As soon as there’s an increase somewhere, you need to react. If you don’t, you’re just going to suffer,” shared Etymon Projects Culinary Director Sebastien Lutaud at HospoNext on Monday, 13 July.
He was speaking on a panel, Creativity in trying times: How chefs are innovating to keep costs down, alongside House Made Hospitality Executive Chef (Hinchcliff House, Grana, Lana, and Apollonia) Alex Wong.
With rising wage costs, rents, and cost of goods sold (COGS), alongside more cautious consumer spending, the entire industry has felt increasingly significant pressure over the last 18 months. The conversation examined how Lutaud and Wong’s respective businesses are finding new and innovative ways to save money in the kitchen, and how this extends to front-of-house.
Both Lutaud and Wong noted that even though customers are still frequenting their venues, average spend has diminished, with customers opting for less entrees, snacks, and desserts.
“People are a lot more conscious of how much they’re going to spend,” said Wong. “They’re asking, ‘Should we get that dessert, or skip it today?’ Or asking whether they should skip the entrée, go straight to mains, and go home.”
“It feels like the customers are adding up in their heads the bill beforehand, and how much they want to spend,” added Lutaud.
Lutaud said he’s seen the beverage side impacted the most, with customers opting for higher quality bottles of wine – but less of them.
In response to this shift, Wong says there have been a lot more conversations happening behind the scenes with suppliers.
“We’re being transparent with suppliers and negotiating on flexible pricing for the group as a whole, or even the three venues in Hinchcliff House. There’s a lot of crossover in ingredients now to keep costs down.
“For example, both Lana and Grana are using a Berkshire pork cutlet – this means we’re buying more, so we can negotiate a better deal.”
They’re also beginning to slow purchasing on ingredients that are making less commercial sense.
“We’re in the middle of truffle season right now,” says Wong. “In the last few years, people were more excited about it. We’re definitely buying a lot less of those kind of luxurious ingredients.”
The HospoNext audience
At Etymon, Lutaud said they’ve closely considered the pros and cons of increasing prices. In some instances, he says, it’s better to decrease portion sizes and keep prices the same, to manage customer expectations.
“Customers look at your menus and they start adding it up and they might see it as too expensive. I think the first phase we look at, is having a price point that feels attractive and approachable.
“When you change the price, the customer will notice if it’s $55 last week, and $60 this week. But they won’t notice if there’s 20g removed from the protein size. It’s an easier way.”
Another crucial point to keep prices down is to constantly keep abreast of produce costs and consider how each individual ingredient might provide opportunity for savings. For example, the team at Etymon goes through about 110 kilograms of butter each week. By changing butter supplier, Lutaud managed to save about 40 per cent – which added up to roughly $54k annually.
Staffing practices are also important. At Hinchcliff House, Wong is making extra efforts to cross-train kitchen staff, and reduce the number of staff on each shift.
“Chefs can get complacent, because they often love working in their section. But pushing cross training means everyone knows how to do everything. It means we can consider whether we really need a pastry chef that day, for example or can work without them,” says Wong.
Wong and Lutaud also noted that front of house staff can provide a huge benefit for sales, and incentivising staff to upsell high-margin products. At both groups, the teams push staff incentives for increasing sales – for example, the waiter who upsells the most items gets gifted a bottle of champagne. With the cost of training staff so high, initiatives like this are a win-win, with staff incentives also increasing retention.
The inaugural HospoNEXT took place in Sydney at the Hyatt Regency on Monday, 13 July, co-located with Pub Leaders Summit. The day featured talks from industry leading experts across the pub, bar, club, and restaurant industries. It also featured the first ever Top 50 Gastropubs Awards, and marked the first time the Future Leaders Scholarship extended beyond the pub sector to the entire hospitality industry. Read more about the day here.
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