In essence, the return on investment (ROI) measures the return that a new venture promises to generate, based on the investment made. Very often, investing in an F&B concept involves more than just channeling financial capital into the project, with other requirements likely to include the mobilization of countless resources due to the details involved in planning and execution. Manal Syriani, senior consultant at N4TC, takes us through four alternatives to the traditional model
Some aspects of investment can be easily measured with ratios and rates to allow owners to monetize their results, such as the return on investment (ROI), while others are not as easily measured due to their intangible nature. Alternative return measures have the ability to reflect the field data that is more often than not the actual measure of success.
Return on time (ROT)
Time is the scarcest resource in the market today. With connectivity greater than ever before within the social matrix and across the business world, interacting more extensively with clients, suppliers, employees and other stakeholders has become essential to the success of any concept.
Time spent communicating is time away from operations, which should be addressed by delegating to key employees. On the other hand, some of the activities you engage in produce a very low return for a high investment of your time and these tasks should also be delegated. Spaced repetition training and coaching will be necessary to ensure the team understands the task, the rationale behind it and how that task fits into the concept. This kind of training involves splitting the task into small intervals over several days, with close coaching on the outcome.
Return on opportunity (ROO)
ROO is about creating pathways to opportunities; recognizing moments and situations that could be transformed into advantages for growth by leveraging knowledge in the field and connections. Successful entrepreneurs strategically position themselves where opportunities are most likely to arise and have the readiness and resources to respond while the iron is still hot.
Such situations could present themselves in customer complaints, by focusing on turning similar scenarios into opportunities to build loyalty and recognition. However, capitalizing on these openings requires a leadership mindset.
Return on vision (ROV)
Return on vision can reap rewards when F&B owners have a clear idea about the end in mind and then implement it through a specific culture. A concept’s true brand is the top management vision taken forward and made systematic. A vision that is well thought through and implemented translates into clear policies and procedures, which will boost the day-to-day operation.
A clear vision can lead the strategy, the brand and the team into a culture of development and ownership. It allows key employees to capitalize on the ROT, by cutting through the noise and facilitating a clear system for decision-making.
Return on ego (ROE)
The F&B industry is a unique field that builds and feeds on passion and recognition. It is interactive and capitalizes on social media and PR to ensure ongoing success. With entrepreneurs looking for ways to get their brands (and themselves) noticed, there can be a temptation to fall into a cycle of spending time focused on racking up compliments, likes, shares and favorites, without a clear idea of whether there is a financial benefit to that work. This risks boosting your ego instead of your bottom line.
It’s easy to get sidetracked by the positive feedback and acknowledgement, especially at the onset when the concept is still ‘innovative’.
The advice would be to:
1. Create realistic measures and systems for decision-making at the start of the venture.
2. Hire trustworthy managers and decision makers that will ensure the brand remains the priority.
3. Have the wisdom to say things as they are.