Endeavour Group uses AI to recession proof its business
Endeavour Group is harnessing artificial intelligence (AI) to combat the issue of escalating wage bills, even as it experiences a trade surge in its pubs.
Australia's largest publican believes it can use AI as a recession proof tool, despite its strong bottom line.
Endeavour recently reported savings of $100 million over the past two years via AI and tech-based optimisation programs implemented across its Dan Murphy’s and other retail locations.
Its solutions now include an AI-based rostering system that monitors employee activities, minimises downtime, and ensures staff presence when and where necessary.
The company plans to apply this system across its 353 hotels portfolio to counteract the increasing labour costs stemming from post-Covid worker shortages and soaring inflation.
According to Endeavour Group Chief Executive Steve Donohue, these measures aim to ensure the right staff are available at the right times, focusing on customer service.
Donohue stressed the need to avoid wastage in administrative or inventory processes to maintain customer service as their primary goal. He stated, “We try and avoid wastage in inventory processing or administration … so we can keep our focus on serving our customers because that’s what they want us to do,” he said.
“We’ve, over the last two years, used those sorts of methodologies to reduce our costs by $100 million and we’ve got line of sight to doing that again and again over the next few years, which we’re going to have to do in the face of the sorts of inflation that we’re facing.
“We’ve built this muscle and capability now that gives us confidence that we can roll that forward, and in particular we know we can start to bring that capability to our hotels business which has never had that before.”
Endeavour Group's cost-efficiency push coincides with the two-year mark since its separation from Woolworths and follows a string of acquisitions, including 16 hotels and three wineries.
Despite a cost-of-living crisis that strained household budgets, Endeavour’s pubs have performed well, with sales increasing by 18.5 per cent in the quarter ending April 2, compared to the same period last year.
Beyond its hotel business, Endeavour Group operates 264 Dan Murphy’s stores and 1437 BWS outlets across Australia. Donohue said these outlets are also performing strongly amid the downturn, likening their resilience to staple goods in consumer behaviour.
Jonathan Jackson, 26th June 2023
