The last year has dramatically changed the lives and livelihoods of people across the world. For the majority of organisations in the hospitality sector, the focus in March 2020 pivoted overnight from expansion to survival, from investment to the identification of cost savings and from dreams to damage limitation. The situation demanded rapid adjustment and efficiency gains and, to this day, limited-service operation and new safety norms continue to present both financial and operational challenges for operators across the industry. Quite simply, the pandemic took all the fun out of food service.
Now, while operators continue to make redundancies in order to help balance the books, the remaining staff are often facing additional tasks and workloads. As with any unexpected, untested situation, change has become an imperative rather than something to resist, and businesses are inevitably seeking new ways to operate more efficiently.
Facing post-pandemic challenges
As the country moves out of lock-down and begins to reopen, Catering Scotland takes a look at the challenges facing hospitality and leisure businesses and meets one operator who recognises the merits of enlisting a procurement specialist to streamline operations and keep purchasing costs to a minimum.
Many banks, investors and finance professional comment that lack of procurement strategy and joined-up thinking are among the weakest links when it comes to investing in a hotel or restaurant group. Having a proven system and process in place delivers the confidence in the due diligence process that investors need.
Support from a procurement partner
Partnering with a procurement expert has always been about saving money, minimising administration time and alleviating pressure on staff during these leaner times. However, there are several other factors that should be considered to ensure a business receives the level of support that best fits its requirements.
Signing up in 2018, it didn’t take long for Richard Spanner’s Barony Castle to start noticing the benefits of Pelican’s purchasing expertise:
‘We started saving money and noticing other advantages almost immediately after partnering with Pelican Procurement Service,’ says the seasoned hotelier. ‘Our processes became far more streamlined and we began to realise how a purchasing specialist can provide different layers of authority without us losing control.’
Richard Spanner, Managing Director at Barony Castle LLP
According to Richard, the company’s previous purchasing set up was a fairly complex, time-consuming arrangement to administer, and the team had been looking at ways to simplify it for some time when a contact recommended Pelican: ‘It had become quite difficult to scrutinise every aspect of administrative commitments such as purchasing, without it being a daily grind,’ he explains.
‘In the past, one of our biggest challenges had been finding the time to check product prices on invoices against the figures we’d agreed to pay our suppliers when we negotiated the contracts.
‘Because of the volumes of food, drink and dry goods coming through the business, this could often mean hundreds of individual invoices we’d need to check.
‘If we didn’t, we had no idea if we were being charged what we’d agreed, and given our wide customer base, we needed a system that could cope with the constantly evolving product ranges flowing into the hotel.
Pre-pandemic, Barony Castle was turning over around £1.5m through F&B in weddings alone but it was becoming increasingly time-consuming having to manually input and analyse invoices into the system. Taking advantage of procurement expertise and the attendant savings that come with it, Richard and his team can now hand-pick suppliers whose terms have been pre-agreed with Pelican.
An effective go-between
‘Other than the cost savings, the major benefit is that we’ve got a go-between,’ he adds. ‘All our suppliers came on board with Pelican too and so now we get the best out of them and never have to worry about upsetting anyone.
‘Fruit and veg are typically negotiated around 30-60 days in advance, while certain dry goods can be up to a year. However, the benefits aren’t confined to saved money and admin hours, as Richard explains:
‘Pelican always comes to us with trends and ideas to revitalise our food offering. London, for example, is typically two-to-three months ahead of everywhere else, so it gives us ample time to predict what’s coming down the line. Aside from impressing our customers it also keeps our chefs interested, engaged, motivated and inspired.’
Having fostered a close relationship over the last three years, Richard and his colleagues are impressed with Pelican’s hands-on approach and their Pelican account manager Julia Hemsley.
‘We get near constant contact from them to ask if we’ve considered trying a certain ingredient, dish or concept. Sometimes they call us up to ask if we would like to enlist a specific supplier. They’re attentive but not in an intrusive way; they’re very much there to assist us.’
Delivering procurement expertise for over 30 years, Pelican is arguably one of the few truly professional procurement organisations in the hospitality sector. Supporting a wide range of organisations in education, hospitality and healthcare, the company provides procurement expertise together with an award-winning cloud-based technology, Pi, to deliver significant financial benefits and efficiencies for clients. The Pi system has been designed in-house to support catering, finance and operations teams and what’s more, is available at no charge to Pelican clients.
Supply chain consolidation
Working with national and local suppliers of all sizes, the company utilises cutting-edge technology to consolidate supply chains, streamline processes, reduce users’ carbon footprints and to reassure clients that they’re receiving the agreed prices, quality and service levels for the duration of the contract.
All in all, joining Pelican has proved to be a significant boon for Richard and his team at Barony Castle: ‘It’s a no-brainer, as far as our business is concerned,’ he concludes. ‘In the past, we’ve always invested heavily in software to help our business but the beauty of Pelican is that their software is free to use.
‘Not only did we save between £50,000 and £60,000 in the first year alone but our relationships with suppliers have actually improved because they now get clear, manageable orders and they always receive payment on time. It’s definitely been worth it.’
And in allowing Barony Castle staff to focus on their core business activities, Pelican saves the team from having to trawl through a pile of invoices each month. The Pi system is also able to integrate with EPOS and account systems including Sage, Xero and Navision, among others.
More competitive pricing
But according to Richard, simplification and time-saving qualities aren’t the only advantages of using a purchasing specialist: ‘Through Pelican, we’re noticing more competitive supplier rates overall,’ he adds. ‘The company does most of the negotiating for us, which generally means bypassing the sales reps and presenting their employers with considerably less room for pricing manoeuvre.’
And with as many as one in ten supplier invoices proven to be inaccurate to some degree – whether due to manual errors, electronic blips or everyday price movements in the market – the need for scrutiny and diligence has never been greater.
