What causes fluctuating demand

Consumers’ demand for hospitality services and products fluctuates depending on the time of year, offerings, and location. These variations are known as seasonality and are usually predictable and therefore can be mitigated against.

You’ll typically experience a boost in patronage during holidays, school breaks, festivals, conferences, or other local events, even indirectly. Putting out feelers and setting up alerts about such events can help you plan and increase staffing appropriately.

Meanwhile, consumer preferences for particular kinds of hospitality services will wax and wane. Keep on top of these with strong tech-enhanced data collection and analysis (see details below) to understand how it affects your business.

Be outward looking, too, via social media and industry trends reports, such as this global one from Revfine. Also, check out Lightspeed’s report for Australian insights.

These bonus tips can also help you manage fluctuating consumer demand:

• Personalise the customer experience so it’s memorable and unique, and consider how technology can help
• Embrace sustainability and let your customers know about your processes (a third of customers are asking for enviro-friendly initiatives, such as using local or seasonal ingredients)
• Offer flexible booking, including for last minute bookings and cancellation options
• Prioritise health and safety measures, drawing on the lessons learnt from the pandemic
• Attend to dietary preferences, but also keep culinary innovation and wider menu choices happening
• Refresh your outdoor spaces and
• Partner with local businesses, charities, and your communities to raise awareness about your brand.

Best practice for inventory management

Operators are boosting their inventory management in these ways, according to the Lightspeed report and other sources:

• Using an app for back-of-house, saving 1 hour 40 minutes per day with tighter inventory control, and more frequent monitoring and forecasting for both perishable and non-perishable goods
• Adopting tech for just-in-time inventory management to improve processes, efficiencies, and forecasting
• Diversifying suppliers and building relationships through strong communication and more transport supply chains and weighing up options to pre-purchase for peak seasons
• Regularly auditing inventory to pinpoint sluggish items while improving stock-turn rates
• Point-of-sale ordering systems, and
• Harnessing artificial intelligence (a third of hospitality are doing so for efficiency, upping revenue, cutting overheads, promotion, and even menu planning).

Sustainability is key to inventory management. Here’s what hospitality businesses are adopting:

• Going paperless, such as bump screens instead of docks and offering digital receipts
• Have recyclable or reusable packaging and cutlery
• Use farm-fresh, local, or seasonal organic produce
• Motivate their customers to take up the reuseable products
• Offer vegan and vegetarian food options, and
• Track their business waste.

Strategies for successful staffing

Understaffing can fuel negative online reviews, so ensure you have a good staffing strategy in place, ready for your busiest seasons:

• Plan early using your historical sales data, local and industry knowledge as well as upcoming events
• Create a recruitment strategy with clear role descriptions (with rights and responsibilities), an advertising/marketing plan, and recruitment
• Partner with local schools, higher education, and training providers to inform them about your job opportunities
• Go online with your advertising, but also streamline interviews if doing a ‘bulk’ hiring drive
• Think about cross-training staff in several areas so they can fill gaps during your busiest times
• Discuss flexible work options with candidates
• Keep improving your work culture with inclusive practices, rewarding top performance, and running work social events
• Provide good communication, particularly about shifts
• Use software for rostering and scheduling to save you headaches, and
• Monitor your processes, seek feedback from staff, evaluate, and tweak your approaches after each peak season.

Cash flow management

Here’s how to improve cash flow whatever the effects of seasonality on your SME:

• Know the revenue cycle of your business by drilling into your data and forecasts
• Use tech to track and manage cash inflows and outflows, checking those off against your budget projections
• Control costs by identifying unnecessary spending
• Adopt strategic pricing based on analysing market trends, customer demand, and competitor pricing
• Nurture robust relationships with your financial lenders
• Streamline staffing and conserve energy use during slow times
• Schedule renovations or repairs during the off-season to reduce disruption to income, and
• Highlight low-season advantages to customers, including fewer crowds, cheaper prices, and a more casual atmosphere.

What’s trickier to predict is the impact on your business of the cost-of-living crisis. A recent survey shows Australians spend just 5% of their monthly income at hospitality venues. An industry report says hospitality businesses made these moves to deal with inflation:

• Changed menu items
• Renegotiated with or changed suppliers
• Reducing staffing numbers
• Closed some operations or cut hours, or
• Increased pricing.

Keen for more tips about risk management? Be sure to check out our future email articles and chat with us.