What challenges will arise post-Covid-19 for the investors who were planning to invest in the Hotels and Restaurant industry pre-lockdown?
Jaideep Gupta: The obvious challenge will be the low expectation of returns on their investment. Bluntly speaking, a person would be brave to invest in traditional hotels and restaurants till the time the pandemic is completely controlled. However, non -traditional hospitality avenues would be a good bet. Delivery Kitchens, Cloud Kitchens, Delivery infrastructure, Food grade good quality packaging, hygiene-related products, ready to eat packaged food – these are some of the businesses expected to do well post the lockdown. Therefore, investors do have options.
How important is it for Hotels and Restaurants to do appropriate and correct procurement and inventory management?
Jaideep Gupta: This was always important even before the pandemic. Procurement and Inventory are crucial functions in our industry since a large part of the overall costs of the business is controlled by this function. Post the lockdown, it will be even more crucial to ensure that organisations do not tie up their scarce resources in inventory and unnecessary procurement. The process will start with the user departments who have to re-evaluate their par stocks and requirements and place orders for items they need to survive. For the procurement heads, this is the time to relook at alternative and cost-effective products, revamp their stores’ stocks, coordinate closely with user departments to ensure a lean inventory and to constantly appraise the decision-makers on ways and means to control costs. This is the time when procurement heads can emerge as heroes of their organisations.
Why do you firmly believe that Smart Management of Resources and People is the key to Profitability?
Jaideep Gupta: I think I have partly addressed this in the answer to the previous question. However, to make it more emphatic, I would point out that the bottom line of any organisation depends on how they leverage their resources to manage both revenue and costs.
Strong systems ensure that all functions of the business are managed in a way that the best quality can be delivered at an optimum cost and least wastage. Hence, smart management of resources.
And who drives these processes? Its people! Organisations need to be smart about their recruitment, retention and training of staff. If both resources are managed smartly, organisations are bound to make profits.
In your opinion what is the correct definition of cost-cutting? In addition, what all measures should be implemented post lockdown to increase the cost-cutting in the hotel and restaurant industry?
Jaideep Gupta: I am almost afraid to answer this question! Unfortunately, the first step taken by many hospitality companies when faced with the constrained inflow of revenue is to hold payment of vendors and delay salaries of staff or even cut numbers in staffing. This is especially true of standalone restaurants.
Cost-cutting is not a knee jerk reaction to situations. To me, a proper cost-cutting exercise involves an in-depth analysis of the use of resources and checking to see where unnecessary costs are sitting so that they can be eliminated. It could be as simple as excess stocks of linen and chemicals or as complex as a study to see which functions can be automated or handled by multi-skilled employees. Randomly slashing expenses can cost a business in the long run. I have personally been involved in cost rationalisation exercises and have been able to save organisations a substantial amount of money by process corrections and cost audits, without any effect on vendor payments and salary payments. All it requires is diligence and proper guidance to the teams.
As a member of the Advisory board of HPMF, how are you strategizing your post covid operational moves to bring back the industry on the track?
Jaideep Gupta: Let us be practical. No magic wand can be used to correct this grim reality overnight. It will be a longish battle and we in HPMF have discussed how we can do our bit to rebuild the industry.
The first and most obvious thing to do is to bring back the confidence of the public so that they will patronise hotels and restaurants again as per normal levels. The practice of proper hygiene processes will be paramount. Besides this, the next crucial thing would be to strike a balance between vendors and the organisation. Both have already suffered badly and both will be in need of funds to survive the next few months. The trick will be to balance funds and optimise spending so that crucial supplies are continued. The third factor is to build a strong supply chain infrastructure so that the distribution of goods is not affected. Lastly, procurement personnel have to play their part well during this time as already explained earlier. We at HPMF are building SOPs and strengthening our Vendor relationship strategies for our members so that they can be helped tide over this period. We are coming up with a white paper to address the issues that we are likely to face and we shall also be forming a Task Force amongst senior members that will study and act on specific cases. The advisory board and chapter heads of HPMF are working closely to protect the interests of the hospitality business, the vendors and of course, our members as well.
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