Cost management and small restaurant businesses: a complex balance and the role of management

Abstract

Given the impact of increases in labour, food, or rent costs, leveraging these and revenues has become very complex for many hospitality businesses. By adopting complexity and role theories, this study examines cost management among small hospitality businesses operating in a large Australian city. Face–to–face, in–depth semi–structured interviews were conducted with owners and managers of 13 small restaurants to gather their understanding and involvement with cost management in their day–to–day business activities. Two of the characteristics that organisations must nowadays contend with according to complexity theory, and that contribute to complexity and paradox were identified: competition, and change. Thus, the role of owners–managers is emphasised, for instance, leveraging rising or already significant labour, food, and rent costs. Overall, the findings demonstrate that in order to address an increasingly complex hospitality industry, a much higher level of preparedness and knowledge, but also creativity in identifying 'hidden' or opportunity costs are required.