August update: Stephan Langton – money talks

19 August 2009
August update: Stephan Langton – money talks

After setting their sights on the Stephan Langton pub in Dorking, Chris and Rosie Robinson used their savings to fund the fittings, equipment, inventory and deposit at a cost of about £30,000. They spent an additional £10,000 on refurbishing the restaurant and bar and making their living space more homely. They opened a trading account with NatWest (18 months' free banking) and found their membership of the Federation of Small Businessess helped them to gain good rates on credit card settlements. The business is free of tie, so the Robinsons have their choice of beers, wines and spirits, although Chris says the increase in produce costs over the past year is "frightening".

"The price increases in beers and wines this year are phenomenal, all of which have to be passed on to the customer," he says. After a rocky period in late 2008 when the Robinsons realised that meeting financial commitments was going to be tricky, they secured an overdraft from their bank and arranged with the Inland Revenue to spread VAT payments to see them through the downturn.

Mentor James Horler was quick to identify the need for the Robinsons to manage their costs better when he visited the pub earlier this year. Chris and Rosie admit they may have lost out because of lack of cost management in the kitchen and being slow to react in terms of pricing. Chris says: "As James points out, a 1% increase in food gross profit (GP) might equate to a £5,000 positive effect on the bottom line."

Food cost management systems are now in place, with recipe cards, supplier price checking and dish GP percentage regularly checked. At the start of the year, GP was about 60%, but Horler set a food GP target of 68%, which is now being achieved.

Horler points out that a lot of small businesses pay their bills and everyday costs but do not focus on their gross profit and can end up being "busy fools". "Many people don't have a handle on gross profit or an understanding of what is the right selling price, demographics, the marketplace and managing waste, theft and portion control," he says.

Chris devised a stock costing programme to determine ingredients, net selling prices, margins and the sales mix after Horler's initial visit, which has enabled him to meet the GP target. Horler returns to the Stephan Langton in October, when the team will review the past year. "When I return we can look again at cost prices, selling prices, menu engineering and stretching to a higher GP target," adds Horler.

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The Stephan Langton lived up to its reputation as a traditional country pub by hosting a morris dancing event last month, which went down a storm with the locals. "It was great fun. Diners stayed longer and bar takings were up," says owner Chris Robinson.

The Robinsons advertised the Ewell St Mary Morris Men event in four local parish magazines and plan to continue plugging events with the help of 3663's marketing plan. Good weather in early July and extra leaflet drops led to a 12% jump in sales on last July and 10.9% for the year up to the end of July against last year.

While Sunday lunch business, largely driven by visitors, was down, weekday business was up. The Robinsons also managed to pick up a couple of end-of-term parent get-togethers from the local private school.

Participation in the Daily Telegraph Michelin Guide's fine-dining offer in association with Bonne Maman, which offers three courses from £15 at 350 UK Michelin-recommended restaurants, proved popular. "Chef Simon Adams created a dish with Bonne Maman to accompany the promotion and it brought in many enquiries and diners," says Chris.

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