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  4. Improving Earning Capacity in the Food and Beverage Service Industry

2016 Vol.1
Improving Earning Capacity in the Food and Beverage Service Industry

2016/02/19

Judging from the real rate of market growth in the food and beverage service industry, the market has been shrinking since the early 1990s. Because Japan’s population is decreasing over the medium to long run, the food and beverage service industry is entering a period in which there is a marked distinction between winners and losers. Despite the adverse environment, some companies continue to achieve high earnings. As a management consultant, the author has had contacts with numerous food and beverage service companies and has seen clear differences among them in terms of their earning capacity, or money-making ability. From the standpoint of improving earning capacity, this paper focuses on five factors of companies’ money-making ability: (1) the ability of the establishments to continue activities, (2) the level of capability of employees at the establishments,(3) the capture of added value, (4) the companies’ approach to structural organization of their establishments, and (5) the use of the plan. do.check.act (PDCA) cycle. To improve money-making ability, businesses must first continue perform their standard routines. Businesses with a strong ability to sustain their current actions have the ability to constantly keep improving their baseline capability. Second, the ability level of employees at the establishments must be raised. For that to occur, employees must have a good sense of the business. This, in turn, requires that employees receive the set of tools necessary for business. Third, companies should voraciously capture added value through in-house handling of upstream processes of the value chain, in-house development of unique capabilities, and a business model that has uniquely evolved over a long period. Fourth, a principle for organizing the structure of establishments is to “organize small.” Maintaining an establishment in the food and beverage business seems to require a gross margin of about two million yen. Lastly, it is crucial to have a rapid autonomous PDCA cycle. Embedding such an autonomous cycle in a business requires proper setting and utilization of “place,” deployment of tools for managing operational performance, and the leader’s determination.

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