Return of the Troubleshooters

Both sides meet in the bar the night before. Despite the great welcome, Todd and Louise Moffat seem a bit nervous. No surprises there. After all, only a month earlier they'd spent a small fortune buying the nine-bedroom Acorn Inn in the tiny village of Evershot, Dorset, and they'd invited Caterer‘s Troubleshooters to thrash out where the business should go from here. Neither has much hotel experience, so chances are they're worried that the team will find holes in the business plan.

On the other side of the table, Caroline Beecher and Don Birch are relaxed. It's the second time they've teamed up to troubleshoot a business for Caterer and they complement each other well. Beecher, the consultant, is director of Independent Marketing. Birch, the hotelier, is joint proprietor of the 11-bedroom Beechwood hotel in North Walsham, Norfolk. He is on good form, having tucked the 2003 Hotel of the Year in the Safeway Excellence in England Awards under his belt. Neither can wait to get their teeth into the Moffats' business plan.

The challenge
Over drinks, Louise and Todd explain that they have never run a hotel before, although Louise trained in management with Moat House Hotels. Their experience is in restaurants - they owned Moffats, in Stony Stratford near Milton Keynes. Having run the business for five years they felt they needed a fresh challenge, so they sold it for a healthy profit, took a loan out for £587,050, borrowed the excess from relatives and bought the Acorn Inn with its nine bedrooms, pub and restaurant for £782,050. It's got four AA diamonds and a rosette.

As a former chef, Todd has high hopes for the food and has his sights set on creating a gastropub. By the end of year two they would like to build four more hotel rooms.

Never far from the Moffats' thoughts, of course, is the loan, which costs £4,878.38 a month to service, for 15 years - although they want to pay it off in 10.

It's within their grasp. They are confident they can raise room occupancy this year to 65% from 50% through natural growth alone, pointing out that in May there were 50 more guests than at the same time last year. The couple also hope that by being more hands-on than the previous owners they can reduce the wages bill by training the staff to fit the job - therefore needing to employ fewer people.

And they have a viable business already. Todd expects a 15% increase on last year's turnover of £399,000 (net of VAT), which made a net profit of £96,000. They intend to plough all profits back into the business.

But it's early days. Louise has spent the first month living up in Milton Keynes with the children while the couple try to sell their house (they have a cottage lined up in the village). Todd, meanwhile, has been getting to grips with the business and dealing with immediate problems such as losing three staff, which brought the head count down to four.

Beecher wants a gut reaction. The first thing she asks Todd is how he sees the business. His answer is immediate: "A restaurant with a hotel."

Beecher acknowledges that he's bound to think of the restaurant first, but she stresses: "The restaurant can be the hero of the piece, because that's what you do well, but the focus of the business needs to be on the rooms, because that is where the money is."

Birch has already envisaged what he would do: "I'd pitch yourselves as an inn. You haven't got a residents' lounge - you are more midmarket. I reckon you will make more money that way."

It fits with the Moffats' customer base. With London only two-and-a-half hours' drive away, they aim to target professionals who want a weekend getaway. Midweek, they expect older couples. Beecher and Birch agree that's the right profile. The Moffats' challenge, however, is to get this discerning, demanding customer to keep coming back - and to tell others.

It's getting late, so the discussion is wrapped up for the night, but the Troubleshooters have isolated four areas that need to be addressed in the morning: interior decor, service, marketing and pricing.

The decor At 8.30am everyone gathers for a tour of the hotel (see panel). All are agreed that the interior decoration needs an overhaul. However, despite the fact that the 16th-century Acorn Inn gets a mention in Thomas Hardy's Tess of the D'Urbervilles and is as quaint as any US tourist could pray for, Todd and Louise are adamant they want to avoid the "olde worlde" style, preferring clean, minimalist decor. It's a relief to the Troubleshooters.

The couple have already invested £4,000 in reception, laying a wood laminate floor and buying a dark-wood desk and bookcase from Laura Ashley.

The pricing Beecher is keen for Todd and Louise to start thinking about their pricing strategy, as summer bookings are healthy. "If you are full every weekend, you need to put up the prices," she says.

The rooms turned over £112,000 in 2002, an increase of 10-15% on the previous year, and Todd is confident that with the improvements they can push this up to £120,000.

But he also agrees the rates need rethinking. He's inherited tariffs of £80 for a twin and £120 for a four-poster. The Troubleshooters point out that all the profit will come from the rooms, and Beecher advises him to test the market by adding £5 or £10 to room rates. "Think more aggressively," she says. "Get an extra fiver on rooms at the weekend and learn that way."

Beecher is amazed by the £155 per person midweek dinner, bed and breakfast rate for the smaller rooms. "That's too cheap. You're devaluing the food. Do you really need to give away a night in June?" she asks. "I'd put it up to £180."

She urges the Moffats to think seasonally, pointing out that they could charge more in half-terms and holidays. She explains that it's important they develop a calendar for the year showing peaks and troughs in terms of demand; that they have the right prices in place for both; and that they allow people enough lead time to book.

"In January or February offer five nights for four or three for two," she says.

"Or close and go on holiday yourself," suggests Birch.

Birch reckons they should increase their £50 booking deposit to £100 and suggests a disclaimer at the bottom of the hotel rate card reserving the right to increase prices.

On the F&B front, last year drink sales totalled £120,000 and food was £160,000. This year Todd expects natural growth of the business plus better service to push food sales up to £180,000, which in turn will push drinks up to £130,000.

He wants to keep food prices under £15 for a main, as he reckons that £15 is a psychological fence. Beecher and Birch concur. The average bill for three courses is £25, although there is a bar menu for £5-£6 a head. They discuss charging extra for more expensive dishes but Birch is not a fan - he doesn't like added value either: "I hate giving away a glass of wine," he says. "The AA hates it, too."

Staff Beecher and Birch are surprised that Todd is using expensive staff recruitment agencies to replace the three staff who left. Birch says that when he used one it cost him £500 and the recruit left after six months. Both advise putting ads in local papers' classified hotel and catering sections "where all chefs look".

The perennial problem, of course, is finding well-trained staff in such a rural area. Louise, who envisages a style of service that is friendly but professional, will do a lot of the training, but she's also prepared to send good staff on training courses.

Both Beecher and Birch drive home how important it is for the Moffats to convey their standards to the staff - perhaps taking them out to see hotels they admire. "You need to share the vision with Jack and the rest of the team - take them out," says Birch.

As for staff retention, Birch shares his tried-and-tested method at the Beechwood. "We do tips at the end of the year," he says. "That gives everyone more reason for staying. They can be getting £600."

"Sounds harsh," says Todd. "But we'll look at it."

Marketing Once the Acorn Inn has been upgraded, the Troubleshooters suggest the couple introduce themselves at the nearby Relais & Château hotel, Summer Lodge. Birch reckons the two businesses could recommend each other when full.

Similarly, Birch says, they should invite local B&B owners for dinner occasionally, seeing as they send their guests to eat at the Acorn. He also suggests getting a few local journalists over for lunch to generate publicity.

One hitch is that the Moffats had to take on the previous owners' brochures, and they still have £2,000-worth to shift. Birch suggests leaving them in reception for people to take away but getting new ones printed for mail-shots. "The image side is important," he says. "You are young and you need a young, trendy brochure."

The website is fine but needs to be updated. The Moffats want to include pictures of the rooms, but Beecher warns them off. "People will get set on one room if they see a pic," she says. "Just give them a flavour - a small, tight shot."

As always, Beecher wants a party. "Set a date, say March 2004, and include your staff in the plans to improve the inn. Then, when everything is in place, make a big noise and have a relaunch," she says.

The debriefing It's 20 hours since the Troubleshooters met the Moffats, and despite a good night's sleep in between, everyone's hungry and exhausted. For the Moffats it's been an opportunity to bounce ideas off people who've done it before. Beecher and Birch reckon the Moffats' enthusiasm and vision is part of the battle won, and they should have little problem building the business.

The acorn inn

28 Fore Street, Evershot, Dorset DT2 0JW
Tel: 01935 83228
Web:www.acorn-inn.co.uk

Owners: Todd and Louise Moffat
Purchase price: £745,000 (£782,050 including stamp duty, etc)
Personal funds: £275,000
Loan required: £507,050
Loan cost: £4,878.38 a month

HOTEL

Rooms: nine
Room rate: £80-£120 a night (or from £155 for three midweek nights, dinner, bed and breakfast)
Occupancy: 50%

RESTAURANT

Seats: 45
Average bill: £25 for three courses, £5-£7 for bar menu

PROJECTED TURNOVER (previous year in brackets)

Accommodation: £120,000 (£112,000)
Food sales: £180,000 (£165,000)
Bar sales: £130,000 (£120,000)

PROJECTED NET PROFIT

A 15% increase on last year's turnover of £399,000, which gave net profit of £96,000

The troubleshooters

CAROLINE BEECHER Director, Independent Marketing
Tel: 020 7927 6580
Web: www.independentmarketing.co.uk
Independent Marketing specialises in marketing consultancy and creative design for the hospitality, travel and leisure industries.

DON BIRCH
Joint proprietor, Beechwood hotel, North Walsham, Norfolk
Tel: 01692 403231
Web: www.beechwood-hotel.co.uk
The 11-bedroom Beechwood hotel with its two-AA-rosette restaurant was named 2003 Hotel of the Year at the recent Safeway Excellence in England Awards.

Top Troubleshooter tips for new businesses

• Make sure there is managers' accommodation, as it helps when you sell the business on.
• Encourage staff to buy in to your ideals - show them businesses you aspire to be like.
• Draw up a calendar charting business peaks and troughs throughout the year and get the right prices in place.
• Test your tariff with telephone enquiries by adding £5 or £10 at peak weekends.
• Buy curtains with blackout lining to ensure your guests get a good night's sleep.

Plans and possibilities

The restaurant and the bar
The first thing Todd did when he took over last month was ban smoking in the restaurant. Guests can still light up in the adjoining restaurant bar and pub, but eventually it will be allowed only in the pub. No one has kicked up a fuss, yet.

The next task is to define the eating areas. At the moment the 20-seat restaurant sprawls into the 25-seat bar area. The Moffats want to take the restaurant area upmarket with white linen cloths and replace the dated cartwheel-backed chairs with high-backed leather ones. More importantly, they want to increase restaurant seating by refurbishing the separate 20-seat breakfast room. This will leave the bar for drinks, light lunches and snacks.

Louise knows the image she wants - wooden floors, log fires and lashings of white paint over the nicotine-stained walls. And although they do get bookings from guests who shoot and hunt, she plans to move the hunting trophies to the bar and get some local pottery and paintings instead.

One of their first jobs is to modernise the lighting. Plans for downlighters are thrown out in favour of wall uplighters, which would be cheaper and cause less disruption to fit.

She also wants to reupholster the banquettes in the bar, but Birch reckons they should keep their eye on the bigger picture. "Unless you have a limitless budget, focus on the rooms and restaurant," he advises.

Todd reckons the restaurant fit-out will cost about £25,000 and that he can get deals on furniture through a contact.

The menu
As a chef, Todd has high hopes for the food. His dream is to move the menu away from "inn-style" food and create a gastropub with the focus on local produce. To that end, he will get involved in purchasing and planning, but he has no desire to go back in the kitchen - he's leaving the cooking up to his head chef, Jack McKenzie.

Both Beecher and Birch think McKenzie's plan to invite staff to spend a day in the kitchen is a good idea. It will help staff to understand the menu and then be able to discuss it with guests.

Beecher asks about profit margins on food. Todd explains that the previous owners worked on 69-70% gross profit, but he thinks that's too adventurous. Birch suggests that 62% is closer to the mark.

Beecher and Birch are surprised that Todd uses so many suppliers - four butchers, for instance. "Just have two to play off against each other," suggests Birch. "Otherwise, it is too many cheques and things to manage."

The Troubleshooters also advise Todd to go for a weekly menu instead of changing it every day. Birch points out that if the average length of stay is only two or three nights, guests will still have plenty of choice. At the Beechwood they have seasonal menus, and he reckons it would work at the Acorn Inn, too.

Bedrooms and bathrooms
Todd acknowledges that if he wants to win the professional London customer and hike up the £80-£120 room rate, then he needs to upgrade the rooms. He's keen to get to work on some of the shabbiest bathrooms immediately, using the £4,000 he has saved this month through losing the three staff.

Birch is a bit worried, though. He reckons that the Moffats should cash in on summer trade first and then start decorating the rooms when it gets quiet. Even so, he's the first to point out that 60% of short breaks are booked by women, and "They always want a bath."

The problem for the Moffats is that some bathrooms are too small for a bath. Beecher, who wasn't too impressed with the shower in her room, urges Todd to get power showers where necessary. "Bathrooms are important, and you don't want people to feel disappointed when they arrive," she says.

Birch adds that they also need hairdryers in each room. "Ladies want them. Just buy them, they cost nothing."

While Beecher and Todd disappear into the tiny bathroom to discuss power showers, Birch gives Louise advice about curtains. "You need blackouts set into the curtain, don't get interlining," he advises. "People always tell us what a good night's sleep they have had at the Beechwood, and it's because the room is so dark."

The bedrooms themselves will be painted white again to reflect the clean, minimalist look Louise is striving for downstairs. She mentions to Beecher that she has been looking at Laura Ashley furniture, but Beecher wonders whether that wouldn't be too chintzy. However, the range in question is simple dark wood. All agree that Louise seems to have an eye for design. No worries there.

The Moffats do have worries about the size of the rooms, however. Birch allays their fears, pointing out that if they do pitch themselves as an inn, no one will expect anything palatial.

He's very happy with everything. "It's just Disney, isn't it?" he says, admiring the view down to the church from the bay window.

The pub Todd - who admits he doesn't know much about beer - says the stone-walled pub will be pretty much left as it is. The main focus of the Moffats' ambitions is the adjoining skittle room, which will be painted white in the short term, but they have their eye on it for the four mooted bedrooms next year.

Birch reckons it's a good idea. He's been told by an agent that it is difficult to sell businesses on unless they have managers' accommodation. He reckons they should ensure some of the rooms can be turned into living quarters when the time comes.