Cost Reduction

 

Why is there a myth that most hospitality businesses fail? Its not actually true, indeed studies show that there is marginal difference between restaurant failures and other comparable industries. Setting that aside – the real question is: WHY do businesses fail?

 

There are essentially two primary reasons:

 

1) Management

2) Insufficient capitalisation

 

The capitalisation relates to start-up funding which is of course down to forecasting correctly and allowing margin for error. 

However the Management is more of a variable.

 

While the obvious attributes of having the four primary components: Good location, Good  Product, Good Service and Good environment are important – the often overlooked essential is operating with the correct cost ratios.

 

On the assumption that you will never squeeze more than 100% from 100%, it is always important to recognize that if costs are more than income – the business will not survive!

 

Phoenix Management Consultants provides a forward thinking Cost Reduction solutions – these include:

 

• P&L analysis with automatic identification of specific-area overspend

• Vendor price analysis

• Assistance with waste management through state-of-the-art products

• Purchasing review, with improved supply-chain and cost-reduction recommendations

• Waste management analysis, with strategies to simultaneously reduce waste costs and encourage recycling

• Revenue generation via marketing and enhanced space leveraging

• Vendor negotiation and renegotiation

• Contract review, negotiation, and renegotiation

• Recovery of unclaimed vendor charges

• HR review, with strategies to reduce departmental costs and manage risk

• Inventory management

• Operations and COG improvements

• Telecommunications cost reduction and management

• Utilities cost reduction

• Insurance cost reduction

• Food cost management and Menu Re-design

• Lease negotiations

• Cost containment strategies and processes

• Liquidation of unused assets

 

The Phoenix Management Reduction Process

 

While every company necessitates a specific course of action, clients of Innovative Recession Economics can expect the cost-mitigation process to proceed generally as follows:

 

Preliminary savings analysis - We conduct a confidential, no-cost analysis of your company P&L to quickly establish cost-savings opportunities. We then calculate our savings analysis by benchmarking your expenses with proprietary purchasing data from our extensive database.

 

Client engagement - We work with our clients to confirm which expense areas to review, identify any supplier sensitivities and constraints, and establish a commencement date and project schedule. At this point, the client is invited to begin utilizing our pre-certified vendors, who offer group pricing, volume incentives, and services that most companies cannot access on their own.

 

Expense history analysis - We compile and format historical expense data into a customized report. This provides you a categorized account of internal purchasing activities and also enables us to prioritize your savings action plan.

 

Request for proposal (RFP) management - We work closely with your purchasing department to manage the RFP process for the expense categories within the scope of our engagement. Our RFP process is customized to identify your actual purchasing patterns, service needs, and reporting requirements.

We encourage our clients to include non-incumbent vendors in the bidding process.

 

Group purchasing - We offer an immediate opportunity for clients to realize the benefits of our group purchasing contracts.

We contract with leading vendors that offer deep discounts and economic incentives based on Phoenix Managements vast purchasing power.

 

Final presentation - We document the total cost-savings and efficiency improvements and present a detailed report to your management team.

 

Implementation - We arrange and facilitate supplier meetings with your key employees, establish performance measures for these suppliers, and implement the reduced pricing schedules for your purchased supplies and services.

 

Vendor management - We schedule business review meetings with your team at regular intervals to ensure you are benefiting from maximum cost savings and taking advantage of vendor best practices.