Refurbishment of a hotel restaurant to improve the profitability.
The restaurant opened its doors in 2009 with an Art-Deco style in the heart of Brussels. It had 120 seats and a bar in the middle of the restaurant with 20 more seats and direct access from the street. From the beginning, it has been the place to be in the city, thanks to the hotel’s location. Both lunch and dinner were fully booked, and availability was found following a reservation. It must be mentioned that not only was the product good, but the Operator was doing a good job promoting the property very well in the media. As a result, the restaurant served 145K covers in the second operating year, as there were two shifts per meal. The average check was €62 net. In other words, an annual revenue of €9M was obtained. Thanks to the high volume, the payroll represented only 29% of the outlet’s income, and other expenses were only 6,4%.
Nevertheless, after the sixth anniversary, the volume was dropping year after year.. A lot of other restaurants opened in the area, with new furniture, and the hotel’s outlet was not that attractive anymore. The Operator was trying hard with their marketing team to promote their product, but the market saw that the product was tired. On top of that, more maintenance was necessary for the old furniture. In 2018 the departmental profit was 32% of the one in 2010:
The next step was to ask for the renders and request the hotel’s purchasing department to find quotations for the new furniture. At the same time, we asked the local management to prepare a P&L of the outlet after the new design. The said P&L had been challenged several times by our F&B experts to avoid any bad surprises for the Owner. Once we had all the information, we calculated the very low ROI (0,6 years). With all the above information, a detailed report was prepared for the Owner, which was presented some days later with all the revenue assumptions. It was so well prepared and so obvious to the Owner that he approved it immediately.
What was critical to achieving all of the above was the methodology. We work with a lot of structure to avoid any pitfalls. As explained before, it is easy to obtain the expected results by using the right arguments ( a good ROI). Good preparation is essential to ensure that your figures are correct. On top of that, choosing the right experts (like in the case of the designer and the communication company) is crucial.
As we see from the above table, the outlet a year later triplicated its profit, although it didn’t achieve the same amount of covers. This was normal as there were more offers in the city. Nevertheless, the average spent increased by 12% in a year. The higher profitability not only increased the Owner’s earnings but also increased the Operators fees. This is the result of professional asset management.