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Hotel Food and Beverage: Numbers to Success

03/17/2014
Food and beverage revenue can make up to 20 percent of all hotel revenue or more. That is a significant part of a hotel P&L. Recently, an increasing number of hotel executives have begun to view their full-service restaurants as a way to attract customers and drive incremental revenue for their business.

This is a significant shift in thinking, where hoteliers have historically paid little attention to their restaurant numbers, essentially having them as one line in the P&L report.

Trends such as the rise of a more food-conscious culture is also impacting the traditional notion of hotel food options. Today, more and more customers who travel seek out new and exciting culinary experiences that they may have seen on TV or heard about from a friend. This trend has compelled hotel operators to think more strategically about the restaurant and food options they provide on property to attract and retain hotel guests.

Having worked with numerous hotels over the years, I have seen two very different paths emerging in the hotel industry when it comes to F&B strategy. Hotels can either choose to manage and run their restaurants themselves or they can choose to work with a partner restaurant company and essentially have the partner manage the brand. This decision can drive the type of customer dining in the restaurant and greatly impact the bottom line.

Hotel-Managed Restaurants
In the hotel-managed restaurant model, the hotel drives the entire guest experience, from the bedroom to the dining room. This allows the hotel to control the entire brand experience from top to bottom. Examples include the Mandarin Oriental, Asiate restaurant and Cookhouse in the SoHo House in NYC whose design, food and service reflect that of the hotel and are meant to attract hotel guests. Hotel managed restaurants tend to have a higher capture rate, meaning a larger percentage of those who dine at the restaurant are also guests of the hotel. Hotel managed restaurants also tend to focus less on signature menu items, attract less local diners and put a heavier focus on breakfast service for their hotel guests like tourists, conference goers and business travelers.

Partner-Managed Restaurants
With the partner-managed restaurant model, hotels work with outside restaurateurs to create a dining experience that is appealing not only to hotel guests, but to local clientele. These are dependent on creating a guest experience that attracts locals and regulars. Often these hotel restaurants are less associated with the hotel and take on a brand of their own. New York City examples include Maialino in the Gramercy Park Hotel and Locanda Verde in the Greenwich Hotel. Partner managed restaurants tend to have a lower capture rate as they are creating a brand that attracts a local, returning following rather than appealing to hotel guests only. They consider a regular customer base a key component to financial success. They also operate under the assumption that if they have a regular customer base, customers are likely to recommend the hotel to visiting family, friends and colleagues. Partner managed restaurants focus more on signature dishes – signature dishes are dishes that people around a particular city will travel to try. Dishes that have a “buzz” around them typically out-perform all other dishes on a restaurant menu. One landmark New York City restaurant sells over four times more of its signature appetizer than it does the remainder of its appetizers. Partner managed restaurants also focus much more on lunch and dinner service to create the draw for the local following as a dining destination.

So, as hotel guests continue to demand more with regard to food options, we will continue to see the importance for hotel operators to evaluate their food and beverage operations and make informed decisions about how they want to feature their brand to make their full service restaurants a profitable revenue center. Opting for hotel-managed or partner-managed restaurants is one of the many strategic decisions that they will need to make.

*Data provided by Avero, LLC
About The Author
Damian Mogavero

Avero


Restaurant CFO turned entrepreneur, Damian Mogavero recognized the restaurant industry’s need for a revolutionary tool to help chefs/managers/owners run operations more efficiently. Avero was launched in 1999 to provide a simple-to-use software that would empower food and beverage operators to make faster and more profitable decisions.

 
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