The next chapter 6 December 2019 Lexington managing director Julia Edmonds on taking the helm at the boutique caterer and her people plans for the future
In this week's issue... The next chapter Lexington managing director Julia Edmonds on taking the helm at the boutique caterer and her people plans for the future
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Product and profit

01 January 2000
Product and profit

Don Birch and Lindsay Spalding have spent the past year consolidating business at the Beechwood hotel at North Walsham in Norfolk. Instead of investing a lot of money in marketing the product, the partners have concentrated on the product itself. Marketing spend, as a result, has dropped to 2% of turnover, compared with roughly 5% last year.

Their efforts have paid off. Weekly takings have increased on average by £1,000 - and that's without doing buffet lunches, bar snacks or any special offers. "The buffet did get people in," says Birch, "and it was the right thing to do at that time, but now the table d'hôte lunches are standing on their own."

In addition, they are well on their way to achieving the 1998 target of increasing turnover by £13,500, with the figure for the first six months of the hotel's financial year, from November 1997 to April 1998, up by £15,000 against the same months last year. Average occupancy for the period was 74%.

This kind of growth has been necessary to maintain 17 members of staff on the payroll of the nine-bedroom hotel. The team now includes four chefs, three of whom are full-time. Adam Goodwin is the latest to join the kitchen brigade. His addition means that the hotel now has a dedicated pastry section and all desserts are made in-house. This allows head chef Steven Norgate time to concentrate on the rest of the menu, for which the brigade has already received recognition with an AA rosette.

Front of house, Birch and Spalding are about to appoint a new duty manager, andare seeking someone whose strengths lie in food and beverage.

The strengths of the hotel team, both back and front of house, are paying dividends to the business. The kitchen brigade has achieved an average food gross profit this year of about 70%, compared with 62% last year. The increase in the price of the three-course table d'hôte dinner, from £14 to £17, has also helped the profit margin.

Bank charges

The only downside to the increase in business at the hotel is its knock-on effect on bank charges, and Birch and Spalding are negotiating with the bank to get them reduced. The pair have already managed to have the interest rate on their loan reduced and they're now focusing on cheque and other transaction charges. "Last year," says Birch, "banking charges were £4,000 just to run the account, and it's too much money."

Although he feels the business is getting a good service, he would like a reduction in the 26p the hotel pays for Switch and Delta transactions and, more importantly, the 48p per cheque. Already, staff encourage people to pay with direct debit cards.

In addition, Birch and Spalding have decided to stop accepting American Express, because so few of their customers use it and they feel the charge of 3.35% per transaction is too high. A further cost-saving initiative has been introduced in the bar, where all prices are in 10p increments and therefore the bank doesn't have to deal with any small change.

Finally, the extensive investment of more than £12,000 made in three of the bedrooms last year has already been paid back, and this has persuaded the partners to do another two rooms next year.

Next week we revisit Butlers

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