Quantaco CEO, Anthony Sullivan recently joined Luke Butler on the Back of House podcast to discuss the 2023 financial year report, data-led hospitality, and how to tackle some of the current challenges that hospitality businesses are facing. Here are some of the key takeaways that all hospitality businesses should know from the episode.
Confidence in Hospitality is on the Rebound
With proposed changes to legislation, some of which have already started to come in, as well as the period leading up to the election, we saw reduced confidence in people’s willingness to invest in their businesses. But, despite a currently difficult environment with reduced consumer demand in some areas and increasing interest rates, this is starting to shift.
Anthony shared on the podcast, “We’re certainly seeing a lot more activity in the market. Trade has continued to be relatively strong, albeit it has plateaued out and it’s not the strongest trading we’ve seen, but it’s still pretty good and that’s bringing some confidence back in the market. Which seems to be a softer landing than it might have otherwise been.”
Diversifying Reaps Rewards
The gaming industry has seen a move more towards a food and beverage driven strategy, as opposed to just gaming. With some larger gaming groups already switching focus to diversify their offering to meet business needs.
But, this strategy is not just limited to the gaming segment, Anthony shares his insights on diversifying your assets by saying, “Take advantage of multiple revenue streams in the circumstances where you can. It has an impact. I think it’s just unquestionably the right thing to do to maximise the value of your asset. Obviously, some venues are limited where they don’t have the footprint or the scale, but if you can, it provides an overall benefit to an asset.”
Improving Your Financial Perspective
Many hospitality businesses have found themselves in a less than ideal financial position, with plenty still actively recovering. Luke and Anthony touched on the key steps that venue owners need to improve the financial position of the business.
All too often owners don’t want to confront the difficult scenarios they may be facing, and this can make it worse. But the first step is to make sure you have the right data to make the right decisions about what to do. There is a lot you are able to do to ensure that you can make decisions to continue to turn your business around, but to do this you need more than a profit and loss snapshot at a specific moment in time. Instead, forecasts that are underpinned by data, accurate cashflows, and rich data on your operational opportunities and challenges can make all the difference.
Anthony also shared, “One of the outcomes of COVID was that there is a lot more competition in the market from a capital perspective, so there are a lot of alternatives out there to get funding. With the right information on your side, if you deal with problems early on and you’re honest about your position there are actually a lot more funding alternatives than the big four banks than people realise.”
Reducing Insurance & Risk Liability
Property insurance is something that should be directly correlated to the risk profile of the property, and yet our data shows a huge disparity between the premiums paid by some groups compared to others with similar risk profiles. As a result, we have helped to tackle this problem by establishing a discretionary mutual fund.
As a result, those in the mutual are assessed on their assets and risk profile so the premiums are not necessarily influenced by the broader hospitality industry and this has been very successful. As a result, on average we have seen insurance costs for property reduce by 15% and that’s in an environment where insurance has been increasing by roughly 20% a year.
We’re also working hard to come up with solutions for public liability insurance which can be a large cost for some venues that have significant risk attached. While venues have to cover their risk, there are some things that can be done to reduce it and this is best done through the use of technology.
Anthony has shared exactly how Quantaco can help with this by saying, “We have a product called Star Compliance which is an incident reporting register with a task listing module, and staff e-training included. You can download your CCTV footage and attach it to incidents and use it to mitigate risks in the future. We are seeing that if you show insurers you’re properly training staff and mitigating as much risk as possible.
They will listen. We’ve shown this tech to some insurers and they love it because it’s data-led which is exactly how they quantify risk.” Ultimately the more transparency you have in your business the more proactive you can be with risk, and it means there’s a lot more you can do to get the outcomes you want in terms of insurance.
Thank you very much to Luke for hosting Anthony on the podcast, and for getting involved in important conversations that can help operators and publicans to unlock the potential in their businesses. To listen to the full podcast, click here.