The last 12 months have been challenging for almost all Better Food Traders. While the pandemic brought a surge in demand and heightened awareness of the fragility of the supermarket system, price rises are now impacting overheads and product margins, and the cost of living crisis is putting a squeeze on customer spending. We know that times are tough, so we’ve put together a few cost-saving tips….
If you haven’t already, it’s worth using Compare the Market or Money Supermarket to see what business tariffs are on offer and check you’re on the cheapest. It’s also worth phoning your supplier to see if you’re still in contract and on the best rate they offer. Ofgem offers further advice here on energy efficiency, government business energy schemes, and grants from energy suppliers.
Make sure you’re minimising energy use by turning off all lights, fridges, water heaters, appliances and radiators when not in use (it sounds obvious but it’s easy to forget) and carry out regular maintenance on fridges, ovens, hobs and cellar equipment to keep running costs down. Checking fridge door seals and cleaning the fans and grilles can make a real difference.
Could you function with one less fridge? Is it worth investing in a more energy-efficient model? Can you reduce your heating, perhaps by moving fridges to benefit from the warm air they expel? If you’re offering cooked food, could you prepare your dishes in a more energy-efficient way (more microwaving, airfrying) or change your menu?
If you use a petrol or diesel van to do your deliveries, it’s worth using the app PetrolPrices.com to help you find the cheapest forecourt prices in your area. You can potentially save hundreds of pounds a year.
Are you using a delivery route planner, and does it offer you a petrol tracker? Software platforms including Ooooby and Shopify offer route planners to make your journey as short as possible, while Google maps is now able to show you which routes are most fuel-efficient.
If you’re doing delivery by bike, shop around your local bike couriers ideally by giving them a ring to speak to someone in person. See if you can negotiate a fixed fee for a minimum number of drops.
Within London, Packfleet is a cost-effective delivery service using electric vans. They only operate within the M25, but they have a fixed fee structure of £6 per shipment, which could work for those of you operating via collection points. They also have integrations with Shopify, WooCommerce, Linnworks, Slerp and other e-commerce platfroms.
Make sure staff are following the FIFO principle (First In, First Out) and use proper food safety systems like HACCP to avoid any food waste.
Also, remember to review your inventory to weed out unprofitable products every few months, and consider streamlining your products if you want to clear some stock and focus on your best sellers.
Keep up to date with your suppliers about prices, as they may not always alert you to changes and prices can often creep up. While staying loyal to your suppliers is really important, you may be able to find offers or cheaper alternatives on things like packaging, cleaning products and products that you buy from wholesalers. Check monthly and quarterly to help keep costs down and maintain profit margins, and don’t be afraid to try a new supplier if you find a better deal.
If you still need to make savings, it is worth phoning up your suppliers to ask what they can do to help in a way that is also sustainable for them. Perhaps you can offer to pay them more quickly – eg from 30 days to 2 weeks – in return for prices being held or reduced?
It’s a painful reality that your staff are often your most expensive overhead, and you may have to find cost-savings by reducing your staff hours or even reducing your team numbers. Make sure you look at streamlining your operations first, such as checking that rotas are well-managed and still the best fit, and ensuring downtime is used effectively for things like cleaning, odd jobs, updating social media or going offsite to deliver leaflets.
If you really need to make a difference, you may have to cut hours. You might be able to do this organically by not covering shifts if people leave or change their shifts. Next, look for any slack periods when you could ask staff to drop a few hours, or perhaps close on certain days of the week or shorten your opening times. If you do need to reduce people’s hours (and contracts permit), have an honest conversation – explain why it’s necessary and for how long you think the arrangement will need to be in place.
For directors, now is also the time to have a really frank conversation with yourself about who you have on your team. Is everyone pulling their weight, adding value to the organisation, and helping work towards efficient and positive working practices? If there are people holding your organisation back, this needs to be addressed as much as staff hours and all of the other things listed above. Changes can be hard to manage, but they can also be an opportunity for renewal, as well as a chance to let other team members develop into new roles.
If you want to discuss your cost saving challenges with other members and get some advice, come and join the Shopkeepers Meet-Up at 10.30am on Monday 27th Feb.