Blog#6

http://www.htmagazine.com/ME2/dirmod.asp?sid=&nm=&type=MultiPublishing&mod=PublishingTitles&mid=3E19674330734FF1BBDA3D67B50C82F1&tier=4&id=1ABF3FDCEDD34BA28B1817C9C59C753C

Hilario, Emanuel N. (2008) Secure future growth with top 3 financial imperatives, Hospitality technology, Nov.18, 2008.

Summary:

Periods of economics instability usually has strong chilling effect on the restaurant industry. When a restaurant steps into its downtime, with the cost increasing and guests reducing, the decisions it makes during this period become more crucial. The author took McCormick & Schmick's as an example, telling us three underlying rules of making decisions, especially under the financial pressure. First is to make the balance sheet your friend, which means we should understand that capital preservation is always the key of financial operation. Spend money that is not necessary during a downturned economy is the biggest mistakes as an operator. Restaurant should focus on maximizing every dollar that comes through the door by emphasizing brand fundamentals and encouraging mangers to focus first on easy productivity. Second, we should try to find out those superior ROI ( return of investment) generators among all the good ideas of how to run a restaurant. The key is to focus on low risk, high return revenue generating opportunities that also offer flexibility. Third, even during the hard time technologies become sort of a luxury, the leverage technologies that provide a real-time view of profits and the cash position are still necessary. For instance, Financial metrics are an extremely effective method for tracking sales, traffic, labor and more, which allow operators to measure the planned budget against actual sales and costs and can also include the ability to do real-time A/P, weekly A/P and forecasting. Technology can also help to track marketing campaigns, so as to decide where to locate marketing dollars. However this requires the operators' ability to deal with a very fast changing environment.

Reflection:

This article became hot probably because the financial crisis now. Restaurants are suffering big trouble now, facing the problem of cost increasing and guests reducing. This article is telling people how to operate a restaurant especially during the tough time. I agree with the author that during a downturn, targeting money to a right place is better than putting money in all places. Saving money is the most crucial thing in the world in this period of time. I also was impressed that the author's emphasizing the improtance of technologies in restaurants even in downturn of the industry. Becasue of the financial crisis, people are struggling between cutting down fundings and developing technologies. During our project with Marriott, we also discussed the relationship between this two. Apparently, developing or introducing some technologies are spending money unnecessarily. However, after we do some simple caculation, the answer would be different. Take hotel room as an example. The automation ambiance might cost an amount of money for a hotel to install in every hotel room. But, according to a related research, automation ambiance can help the save the energy by 40%. Put this situation into a one-year-long term, the saving is significant compared to the cost of installation. So, I agree with the auther that, as a restaurant, even it does not need to be the most advanced, but it should have some basic and good technologies that can support the operation.