F&B is usually the second-highest profit driver in the hotel after the rooms. Nevertheless, its margin is not always as high as it the rooms due to the nature of the business with high fixed costs. It is usually divided into two categories: the banqueting and the other outlets such as restaurant, bar and room service.
Banqueting gives a high-profit percentage and can be an essential attraction to sell more rooms. Your Director of Sales should ensure there are enough initiatives to attract the MICE business. Several purposeful trips and contacts with DMCs are needed to ensure this kind of business.
However, the other outlets are usually the Achilles heel for hotels with low volume creating some frustration as they cannot find ways to increase the number of customers. Usually, it has nothing to do with the quality, especially in the luxury segment, where memorable meals are provided to mark special occasions. Everywhere, except maybe in the Middle East, the clients are not used to associating a good meal with a hotel restaurant. This sometimes resulted in neglect of the restaurants when discussing the CapEx. In contrast, restaurants around the world have become hives of innovation, with foam and moss and foraging firing the imaginations of guests.
The pandemic stripped the balance sheet down to zero and exposed hotels’ weaknesses. In the recovery, high costs have meant that revenue per square foot, not revenue per bed was the only consideration for any hotel which wanted to make a profit.
It is promising, though, to see that some hotel restaurants do extremely well when it comes to volume, reputation and profit. What is behind this success?
This need for revenue has extended to looking to the community around the hotel, not just focusing on those staying the night. Increasingly, hotel architects are changing restaurant access, moving it from a far corner so that it is accessible from the street, encouraging locals and tourists to come and eat, as well as creating a livelier stay. Restaurants can create that atmosphere guests seek, connecting them to the neighbourhood around them.
But, as hotels have found, it’s not easy. It begins – as all hotels should do – with knowing the market you’re operating in. Then identify your target market and start planning your marketing plan. Hotels and their asset managers are used to gathering data to make sure they have the right brand, the right offering for their location, and that is no different for the F&B offering. For instance, if your hotel is located on a busy street in a business hub, consider turning your breakfast area into a trendy local bakery with coffee on the go. With the right amount of CapEx and a design concept, you won’t need to outsource this outlet to another “Fivebucks” franchise. The right offering managed internally will generate a great profit, and it doesn’t need to be complicated.
This extends to pricing. As you benchmark your room rate, so you must benchmark what’s happening on your menu. In a dense city, this can be more complicated than hotel rooms. There is likely to be more variety in restaurants than in local hotels, but you must also ensure that the menu and its pricing reflect the hotel – and, if it has one, its brand.
While we all recognise the cliché of the passionate chef and their demands, to achieve profits in your F&B department, you must be as rigorous in your menu engineering as you are with the rest of the hotel departments. You must analyse sales data and food costs to guide which dishes to feature, and their menu price, no matter how much foot stomping hails from the individual in the tall white hat. And, with costs fluctuating over the past year, setting the menu requires imagination to change the dishes and stay ahead of inflation.
The same analysis should be used for the F&B team. So you have the right staff? Are they productive? Do they project the image you want to portray? Your F&B team interacts more with guests than the regular hotel staff and should be carefully chosen to reflect this.
You will also need to consider the perception of the guest. They want value for money and, as they are likely to cook every day themselves, they recognise cheap menu items when they see them. If they can make something frugally at home, but they are being charged as though it were Wagyu steak, a bad taste will be left in everyone’s mouth. The word of those very mouths will also be key to the success of your enterprise, so ensure that your social media manager is monitoring the customer’s response and providing essential feedback to the operation – whether it is in-house or outsourced.
That same social media will be invaluable to the success of your F&B, where customers can be more fashion-driven than when choosing a hotel. Check the visibility the operator provides across the array of suitable platforms.
When considering trends, there are ways to change your F&B offering without extensive overhauls – although it is important not to ignore or skimp on CapEx requirements. You can raise awareness of your outlet by bringing in a popular chef, or partnering with a drinks brand. It need not be permanent but a pop-up event to draw attention to what you’re doing. Likewise, special nights featuring music, specialist foods, or guided tasting can create valuable events.
It is important to make sure that your F&B offering works with the rest of the operation. Your Director of Sales should ensure there are enough initiatives to attract the MICE business and have banqueting revenues, which usually have a high-profit percentage.
F&B has been giving hoteliers nervous stomachs. But done right, they can make profits and make a hotel. After all, what could be better than eating in a great restaurant and then staggering upstairs to bed?
