WORLDS BIGGEST CATERERS.

Auckland Star, Volume LVI, Issue 192, 15 August 1925, Page 6

WORLDS BIGGEST CATERERS.

-TOW SlT€C_S* M ACHIEVED.

CdSI 1 ANALYSIS AND TURNOVER,

Easily, the largest and most successful! food caterers in the United Kingdom are the firm of J. Lyons and Co., Ltd.,. who have scores of establishments in: London as well as i n other parts of Britain. Last year's operations resulted in a profit of £744;,17<>. The capital-issued stands at £5,872,645. Freehold land and buildings, plant, machinery,, etc.. are valued at £7,428,995. Visitors t<> London will not be surprised! at the last mentioned figures as the firm's sign is conspicuous at most of the busiest corner sites of the world's leading metropolis. As a lesson in accurate costing; and the possibilities of "turnover" the- record of Lyons' business is instructive. Speaking at the last annual meeting one of the managingdirectors, 3fr. Alfred Salmon, said, m reference to the tea shops: ''The sum total of profits- is- a considerable one,, but the number of meals served is counted in millions and the profit per meal is only to be calculated in decimal fractions of a penny, "Most of you," he continued, "at some time or other have seen the tariff of a tea shop, and know the many items upon it. To work out cost and selling price and to maintain them so that the approximate profit shall not exceed a decimal, fractionally in excess of id per meal, requires not only considerable knowledge of market*, but a constant 'supervision and-control of all the various expenses which enter into the cost of serving cooked food away from home. With B<j minute a margin to work upon, every variation (whether in the cost of raw material or the amount spent on labour,, rent, rates, electric light, and all the other numerous expenses) must be under daily, nay, almost hourly, examination, or the margin will disappear. There is a great temptation to meet fluctuations by an increase in the selling price; that is the simplest way out of the difficulty, but is not the way in which this great business has been built up. We fix in our minds the lowest margin that we can. with safety, work to, and use every endeavour to maintain .it at that point.

No Room for Error. "Take another example—the packing of tea. The bulk of our sales is in' |lb packets, and again we are dealing with millions. Cost is affected, of course, in exactly the same manner, and the profit on a ilb of tea is.again only to be calculated in decimal fractions of one penny. In this ease, raw material is by far the greater bulk of the cost, and "the question of weight becomes of very serious importance. The margin of profit is so small that an error of -onehundredth part in the weight of a packet (about one-fifth of a teaspoonful) would be extremely serious. Such errors would be disastrous, for you cannot scrap the packet and re-pack it •without destroying the profit completely. The point lam seeking' to make'is that there is no room for error. It is by working to a Bmall margin of profit that we have been enabled to build up out tea trade to the point that we now handle in packet teas alone approximately one-seventh of the total tea winch comes into the Kingdom. Huge Turnover.

Tlte turnover of the company amount's to many millions of-pounds sterling per annum, and the average selling price of the article sold is pence, not shillings. The illustrations just given could be extended through hundreds of items, and I think you will agree that the degree of skill and knowledge and tlur vigilance required to follow all these minute details, and to contrive that there shall lie a margin, if possible, on every one of tliem. is considerable. It is only obtained by long and careful training of the men" responsible. "I hive been asked with a great air of cunning, even by professional men— but wild horses could not draw from mc whit their professions were—'But. Mr Salmon. $f you only make so small a percentage of profit, how do you mnnto pay 25 per cent?' Of course, the answer is obvious. In the one case you are dealing with turnover, and in the other with capital, and only a, small portion of capital, and the <wnover, needless to say, exceeds the capital by many times."